Pagaya Technologies Ltd ARS, filed Jul 6, 2026
Pagaya Technologies Ltd. (PGY)
ARS
2026-07-06
For: 2025-12-31
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Added on
October 18, 2026
2025 Annual Report
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Amendment No. 2) (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-41430 Pagaya Technologies Ltd. (Exact name of Registrant as specified in its charter) Israel 98-1704718 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 335 Madison Ave, 16th Floor New York, New York 10017 (Address of principal executive offices) (Zip Code) (646) 710-7714 (Registrant's telephone number, including area code) Securities registered or to be registered, pursuant to Section 12(b) of the Act Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Ordinary Shares, no par value PGY The NASDAQ Stock Market LLC Warrants to purchase Class A Ordinary Shares PGYWW The NASDAQ Stock Market LLC Securities registered or to be registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐ Small Reporting Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of May 30, 2026, the registrant had 71,601,146 Class A Ordinary Shares, no par value, outstanding and 11,288,577 Class B Ordinary Shares, no par value, outstanding, and 2,027,147 Series A Preferred Shares, no par value, outstanding. The aggregate market value of the voting Class A Ordinary Shares by non-affiliates of the registrant as of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, was $1,113,790,997, based on the closing price reported for such date on the NASDAQ. Shares of the registrant’s Class A Ordinary Shares held by each executive officer, director and holder of 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose. DOCUMENTS INCORPORATED BY REFERENCE Portions of the First Amendment (as defined below) are incorporated by reference in Part III.
EXPLANATORY NOTE Pagaya Technologies Ltd. (“Pagaya” or the “Company”) is filing this Amendment No. 2 on Form 10-K/A (this “Second Amendment”) to amend its Annual Report on Form 10-K initially filed with the Securities and Exchange Commission (“SEC”) on March 2, 2026 (the “Original Report”) and as previously amended on April 30, 2026 (the “First Amendment”). This Second Amendment is being filed for the primary purpose of updating Note 19 (Segments and Geographical Information) to the Company’s Consolidated Financial Statements included in Part II, Item 8 “Financial Statements and Supplementary Data” of the Annual Report on Form 10-K (the “Consolidated Financial Statements”) in order to provide more detailed information, consistent with prior filings, about the geographic distribution of the Company’s long-term assets. This update does not impact the Company’s financial position for the periods presented and is solely intended to provide more detailed information about these items. This Second Amendment also amends and updates Note 20 (Subsequent Events) to the Consolidated Financial Statements and the Form 10-K cover page (primarily to update the number of Ordinary Shares outstanding to May 30, 2026). In accordance with applicable SEC rules, Part IV, Item 15 “Exhibits and Financial Statement Schedules” has also been supplemented to include currently dated certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and a currently dated consent of Kost Forer Gabbay & Kasierer, the Company’s independent registered public accountants. In addition, this Second Amendment includes an updated opinion of Kost Forer Gabbay & Kasierer with respect to the Consolidated Financial Statements, to update the date of its opinion solely with respect to Notes 19 and 20 thereto. For the convenience of the reader, this Second Amendment sets forth the information in the Annual Report on Form 10-K in its entirety, other than the information in Part III incorporated by reference to the First Amendment, as such information is amended, updated, or supplemented as described above. Except as described above, this Second Amendment does not amend, update or change any other items or disclosures in the Original Report or the First Amendment and does not purport to reflect any information or events subsequent to the filing of the Original Report or the First Amendment, with respect to the information respectively contained therein. As such, except as described above, this Second Amendment speaks only as of the dates the Original Report and First Amendment were filed, with respect to the information respectively contained therein, and we have not undertaken herein to amend, supplement or update any information contained in the Original Report or the First Amendment to give effect to any subsequent events.
CONTENTS Page Introduction ii Selected Definitions ii Special Note Regarding Forward-Looking Statements vii Part I 1 Item 1. Business 1 Risk Factor Summary 7 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 61 Item 1C. Cybersecurity 61 Item 2. Properties 63 Item 3. Legal Proceedings 63 Item 4. Mine Safety Disclosures 63 Part II 63 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 63 Item 6. [Reserved] 64 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 64 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 83 Item 8. Financial Statements and Supplementary Data 85 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 85 Item 9A. Controls and Procedures 85 Item 9B. Other Information 87 Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 94 Part III 94 Item 10. Directors, Executive Officers and Corporate Governance 94 Item 11. Executive Compensation 95 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 95 Item 13. Certain Relationships and Related Transactions and Director Independence 95 Item 14. Principal Accountant Fees and Services 95 Part IV 95 Item 15. Exhibits and Financial Statement Schedules 95 Item 16. Form 10-K Summary 99 Signatures 100 Index to Financial Statements F-1 Table of Contents i
INTRODUCTION In this annual report (this “Annual Report”), references to “we,” “us,” “our,” “our business,” “the Company,” “Pagaya” and similar references refer to Pagaya Technologies Ltd., together with its consolidated subsidiaries as a consolidated entity. This Annual Report includes other statistical, market and industry data and forecasts which we obtained from publicly available information and independent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Additionally, this Annual Report contains estimates, projections and other information concerning our industry and our business, as well as data regarding market research, estimates and forecasts prepared by our management. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those discussed under the headings “Special Note Regarding Forward- Looking Statements” and “Item 1A.—Risk Factors” in this Annual Report. SELECTED DEFINITIONS “2030 Notes” refer to the 8.875% Senior Unsecured Notes due 2030. “ABS” refers to asset-backed securitizations. “Adjusted EBITDA” means net income (loss) attributable to Pagaya Technologies Ltd., excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions and other one-time expenses, interest expense, depreciation expense, and provision (and benefit from) for income taxes. “Adjusted Net Income (Loss)” means net income (loss) attributable to Pagaya Technologies Ltd., excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions and other one-time expenses. “AI” or “AI technology” means our proprietary technology, which uses “machine learning” models as a subset of artificial intelligence that go through extensive testing, validation, and governance processes before they can be used or modified. The “machine learning” models require human intervention, testing, and validation; accordingly, the models do not have the ability to self-correct, self-improve, and/or learn over time. “B. Riley Principal Capital II” refers to B. Riley Principal Capital II, LLC.“Capital Restructuring” refers to, collectively, the Reclassification, the Preferred Share Conversion and the Stock Split as part of the EJFA Merger.“CFPB” refers to the Consumer Financial Protection Bureau. “Class A Ordinary Shares” refers to the Class A ordinary shares, no par value, of Pagaya, following the Capital Restructuring, which carry voting rights of one vote per share of Pagaya. “Class B Ordinary Shares” refers to the Class B ordinary Shares, no par value, of Pagaya, following the Capital Restructuring, which carry voting rights in the form of 10 votes per share of Pagaya. “Code” refers to the U.S. Internal Revenue Code of 1986, as amended. “Companies Law” refers to the Israeli Companies Law, 5759-1999, as amended, and the regulations promulgated thereunder. “Continental” refers to Continental Stock Transfer & Trust Company, the transfer agent, warrant agent and trustee of Pagaya. “Credit Agreement” refers to that certain Credit Agreement, dated as of February 2, 2024, by and among Pagaya, as the borrower, Pagaya US Holding Company LLC, as a borrower, the lenders from time to time party thereto and Acquiom Agency Services LLC, as administrative agent. “Darwin” refers to Darwin Homes, Inc., a Delaware corporation. “EEA” refers to the European Economic Area. Table of Contents ii
“Effective Time” refers to the effective time of the EJFA Merger. “EJF Investor” refers to EJF Debt Opportunities Master Fund, LP, a Delaware limited liability company, an affiliate of EJFA. “EJF Subscription Agreement” refers to that certain Subscription Agreement, dated as of September 15, 2021, by and between Pagaya and the EJF Investor, providing for the purchase by the EJF Investor at the EJFA Closing of up to 20 million Class A Ordinary Shares at a price per share of $10.00, for an aggregate purchase price of up to $200 million. “EJFA” refers to EJF Acquisition Corp., a Cayman Islands exempted company.“EJFA Class A Ordinary Shares” refers to the class A ordinary shares, par value $0.0001 per share, of EJFA. “EJFA Closing” refers to the consummation of the EJFA Merger. “EJFA Closing Date” refers to June 22, 2022. “EJFA Merger” refers to the merger of EJFA Merger Sub with and into EJFA, as contemplated by the EJFA Merger Agreement. “EJFA Merger Agreement” refers to that certain Agreement and Plan of Merger, dated as of September 15, 2021, by and among EJFA, Pagaya and Merger Sub. “EJFA Merger Sub” refers to Rigel Merger Sub Inc., a Cayman Islands exempted company and a wholly-owned subsidiary of Pagaya. “EJFA Private Placement Warrants” refers to the 5,166,667 private placement warrants of EJFA entitling the holder to purchase one EJFA Class A Ordinary Share per warrant.“ “EJFA Public Warrants” refers to the 9,583,333 public warrants of EJFA entitling the holder to purchase one EJFA Class A Ordinary Share per warrant. “Equity Financing Purchase Agreement” refers to the Ordinary Shares Purchase Agreement, dated as of August 17, 2022, by and between Pagaya and B. Riley Principal Capital II. “Equity Financing Registration Rights Agreement” refers to the Registration Rights Agreement, dated as of August 17, 2022, by and between Pagaya and B. Riley Principal Capital II. “Exchange Act” refers to the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. “FDIC” refers to the Federal Deposit Insurance Corporation. “Financing Vehicles” refers to (i) funds managed or advised by Pagaya or one of its affiliates, (ii) securitization vehicles sponsored or administered by Pagaya or one of its affiliates, (iii) special purpose vehicles established by third-party investors to facilitate the purchase of assets under forward flow agreements, and (iv) other similar vehicles. “Founders” refers to the three founders of Pagaya (including any trusts the beneficiary of which is a founder of Pagaya and to the extent that a founder of Pagaya has the right to vote the shares held by such trust). “FRB” refers to the U.S. Federal Reserve Board. “FRLPC” means fee revenue less production costs. “Guarantors” refers to the guarantors under the Credit Agreement. “Investment Advisers Act” refers to the U.S. Investment Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder. “Investment Company Act” refers to the U.S. Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder. “Israeli Securities Law” refers to the Israeli Securities Law, 5728-1968, as amended, and the regulations promulgated thereunder. “ITA” refers to the Israel Tax Authority. “ITO” refers to the Israeli Income Tax Ordinance [New Version], 5721-1961, and the regulations, rules and orders promulgated thereunder, as amended. Table of Contents iii
“Nasdaq” refers to The NASDAQ Stock Market LLC. “Network Volume” refers to the gross dollar amount of assets originated by our Partners with the assistance of our AI technology and, with respect to single-family rental operations, the gross dollar value of services, which may include the value of newly onboarded properties onto our Darwin platform. “Oak HC/FT” refers to, collectively, Oak HC/FT Partners V, L.P., Oak HC/FT Partners V-A, L.P. and Oak HC/FT Partners V-B, L.P. “OCC” refers to the Office of the Comptroller of the Currency. “Pagaya” refers to Pagaya Technologies Ltd., together with its consolidated subsidiaries as a consolidated entity, a company organized under the laws of the State of Israel. “Pagaya Articles” refers to the Articles of Association of Pagaya, dated as of June 22, 2022. “Pagaya Board” refers to the board of directors of Pagaya. “Pagaya Class A-1 Preferred Shares” refers to the Class A-1 Preferred Shares, nominal value NIS 0.01 each, of Pagaya, prior to the Capital Restructuring. “Pagaya Class A Preferred Shares” refers to the Class A Preferred Shares, nominal value NIS 0.01 each, of Pagaya, prior to the Capital Restructuring. “Pagaya Class B Preferred Shares” refers to the Class B Preferred Shares, nominal value NIS 0.01 each, of Pagaya, prior to the Capital Restructuring. “Pagaya Class C Preferred Shares” refers to the Class C Preferred Shares, nominal value NIS 0.01 each, of Pagaya, prior to the Capital Restructuring. “Pagaya Class D Preferred Shares” refers to the Class D Preferred Shares, nominal value NIS 0.01 each, of Pagaya, prior to the Capital Restructuring. “Pagaya Class E Preferred Shares” refers to the Class E Preferred Shares, nominal value NIS 0.01 each, of Pagaya, prior to the Capital Restructuring. “Pagaya Option” refers to each outstanding and unexercised option to purchase Pagaya Ordinary Shares issued pursuant to the Pagaya Share Plans, whether or not then vested or fully exercisable. “Pagaya Ordinary Shares” refers to the ordinary shares, NIS 0.01 each, of Pagaya, prior to the Capital Restructuring, provided, however, that after the Preferred Share Conversion and Reclassification, every reference to Pagaya Ordinary Shares shall be to the Class A Ordinary Shares and Class B Ordinary Shares, collectively. “Pagaya Preferred Shares” refers to the Pagaya Class A Preferred Shares, Pagaya Class A-1 Preferred Shares, Pagaya Class B Preferred Shares, Pagaya Class C Preferred Shares, Pagaya Class D Preferred Shares and Pagaya Class E Preferred Shares, prior to the Capital Restructuring. “Pagaya Shareholders” refers, prior to the EJFA Merger, to the shareholders of Pagaya and, now, to the current shareholders of Pagaya. “Pagaya US” refers to Pagaya US Holding Company LLC. “Pagaya Voting Agreement” refers to that certain Company Voting Agreement, dated as of September 15, 2021, by and among EJFA and certain of the Pagaya Shareholders. “Partners” refers to financial institutions including, among others, banks, peer-to-peer lending networks, online marketplaces, non-bank finance companies, fintechs, financing intermediaries, consumer product companies, brokers, agents and credit unions that have entered into arrangements to benefit from Pagaya’s proprietary technology to assist them in creating and originating credit and other assets that may be acquired by a Financing Vehicle. “PFIC” refers to a passive foreign investment company. Table of Contents iv
“PIPE Investment” refers to the investment by the EJF Investor and by those certain other PIPE Investors pursuant to the Subscription Agreements. “PIPE Investors” refers to the EJF Investor and those certain other investors participating in the PIPE Investment pursuant to the Subscription Agreements. “Preferred Purchase Agreement” refers to that certain Preferred Shares Purchase Agreement, dated April 14, 2023, by and among Pagaya, Oak HC/FT Partners V, L.P., Oak HC/FT Partners V-A, L.P. and Oak HC/FT Partners V-B, L.P. “Preferred Share Conversion” refers to the conversion of the outstanding Pagaya Preferred Shares into Pagaya Ordinary Shares in accordance with the EJFA Merger Agreement. “Public warrants” refers to the outstanding and unexercised warrants to purchase Class A Ordinary Shares issued to holders of EJFA Public Warrants in connection with the EJFA Merger. “Reclassification” refers to the reclassification of each Pagaya Ordinary Share that was outstanding immediately following the Preferred Share Conversion (and for the avoidance of doubt, any warrant, right or other security convertible into or exchangeable or exercisable therefor, including each Pagaya Ordinary Share underlying any Pagaya Option), into one Class A Ordinary Share or one Class B Ordinary Share, as applicable, as set forth in the EJFA Merger Agreement. “Registration Rights Agreement” refers to the Amended and Restated Registration Rights Agreement entered into at EJFA Closing, by and among Pagaya, EJFA, the Sponsor and certain equity holders of Pagaya named therein, replacing EJFA’s and Pagaya’s existing registration rights agreements. “Rule 10b5-1 Plan” refers to an individual share trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in which the individual will contract with a broker to buy or sell shares on a periodic basis. “SEC” refers to the U.S. Securities and Exchange Commission. “Securities Act” refers to the U.S. Securities Act of 1933, as amended. “Series A Preferred Shares” refers to the Series A Preferred Shares issued and sold pursuant to the Preferred Purchase Agreement.“SFR” refers to single-family rental properties and/or business. “SFR Partners” refers to both the Company’s Financing Vehicles that are SFR property owners and any other property owners that the Company and its subsidiaries, specifically Darwin, partners with for property management and other SFR-related operations. “Stock Split” refers to the stock split of the Pagaya Ordinary Shares into a number of Pagaya Ordinary Shares calculated in accordance with the terms of the Merger Agreement such that each Pagaya Ordinary Share will have a value of $10.00 per share immediately following the Capital Restructuring on the basis of the Company Value (as defined in the EJFA Merger Agreement) set out in the EJFA Merger Agreement. “Subscription Agreements” refers to the EJF Subscription Agreement and the other subscription agreements entered into by the PIPE Investors, the form of which is incorporated herein by reference to Exhibit 4.5 of Pagaya’s Registration Statement on Form F-4 filed with the SEC on April 7, 2022. “Term Loan Facility” refers to the 5-year senior secured term loan facility provided for by the Credit Agreement. “Theorem” refers to Theorem Technology, Inc., a Silicon Valley-based institutional asset manager. “Treasury Regulations” refers to the regulations promulgated by the U.S. Department of the Treasury pursuant to and in respect of provisions of the Code. “United States” or “U.S.” refers to the United States of America, including the states, the District of Columbia and its territories and possessions. “U.S. Dollars” or “$” refers to U.S. dollars. “U.S. GAAP” refers to the U.S. generally accepted accounting principles. “U.S. Holder” refers to any beneficial owner of Pagaya securities, that is, for U.S. federal income tax purposes: Table of Contents v
• an individual who is a citizen or resident of the United States; • a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia; • an estate whose income is subject to U.S. federal income taxation regardless of its source; or • a trust if (i) a court within the United States is able to exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions, or (ii) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. “VIE” refers to a variable interest entity. “VWAP” refers to, on any trading day on or after the EJFA Closing Date, the volume weighted-average of the trading prices of the Class A Ordinary Shares trading during such day on the principal securities exchange or securities market on which Class A Ordinary Shares are then traded or quoted for purchase and sale (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source selected by Pagaya), except if there occurs any change in the outstanding Class A Ordinary Shares as a result of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend, the VWAP shall be equitably adjusted to reflect such change. “Warrants” refers to the public warrants and the private placement warrants, collectively. “Warrant Agreement” refers to the Amended and Restated Warrant Agreement, entered into immediately prior to the Effective Time, by and among EJFA, Pagaya and Continental, as transfer agent. Table of Contents vi
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements that involve substantial risks and uncertainties. The Private Securities Litigation Reform Act of 1995, or the PSLRA, provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include, without limitation, our expectations concerning the outlook for our business, productivity, plans and goals for future operational improvements and capital investments, operational performance, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations. Pagaya desires to take advantage of the safe harbor provisions of the PSLRA and is including this cautionary statement in connection with this safe harbor legislation. All statements other than statements of historical facts contained in this Annual Report, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “strategy,” “future,” “opportunity,” “may,” “target,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements involve a number of risks, uncertainties and assumptions, and actual results or events may differ materially from those implied in those statements. Important factors that could cause such differences include, but are not limited to: • the ability to implement business plans and other expectations; • the impact of the continuation of or changes in the short-term and long-term interest rate environment; • uncertain market or political conditions; • the availability and cost of capital, including the financing of risk retention investments; • our ability to service our debt financing and meet associated covenants • our ability to develop and maintain a diverse and robust funding network; • the impact of fair value changes in our risk retention investments in our Financing Vehicles; • our uncertain future prospects and rate of growth; • the performance of our technology to consistently meet return expectations of asset investors in Financing Vehicles; • our ability to improve, operate and implement our AI technology, including as we expand into new asset classes; • competition in attracting and onboarding new Partners and raising capital from asset investors through Financing Vehicles given the current limited number of Partners that account for a substantial portion of the total number of the financial products facilitated with the assistance of our AI technology; • potential difficulties in retaining our current management team and other key employees and independent contractors, including highly-skilled technical experts; • our estimates of our future financial performance; • changes in the political, legal and regulatory framework related to AI technology, machine learning; financial institutions and consumer protection; • the impact of health epidemics, natural disasters, acts of terrorism or other catastrophic events; • our ability to realize the potential benefits of past or future acquisitions; • conditions related to our operations in Israel; Table of Contents vii
• risks related to data, security and privacy; • changes to accounting principles and guidelines; • our ability to develop and maintain effective internal controls; • the ability to maintain the listing of our securities on Nasdaq; • the price of our securities has been and may continue to be volatile; • unexpected costs or expenses; • future issuances, sales or resales of our Class A Ordinary Shares; • an active public trading market for our Class A Ordinary Shares may not be sustained; and • the other matters described in “Item 1A.—Risk Factors.” We caution you not to rely on forward-looking statements, which reflect current beliefs and are based on information currently available as of the date a forward-looking statement is made. Forward-looking statements set forth herein speak only as of the date of this Annual Report. We undertake no obligation to revise forward-looking statements to reflect future events, changes in circumstances or changes in beliefs except to the extent required by law. In the event that any forward-looking statement is updated, no inference should be made that we will make additional updates with respect to that statement, related matters, or any other forward-looking statements except to the extent required by law. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of significant risk factors, may appear in our public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult. Market, ranking and industry data used throughout this Annual Report, including statements regarding market size and technology adoption rates, is based on the good faith estimates of our management, which in turn are based upon our management’s review of internal surveys, independent industry surveys and publications and other third-party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we are not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Item 1A.—Risk Factors” and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report. Table of Contents viii
PART I Item 1. Business History and Development of the Company Pagaya Technologies Ltd. was incorporated on March 20, 2016 and is organized under the laws of the State of Israel. We are registered with the Israeli Registrar of Companies, registration number 51-542127-9. In February 2024, Pagaya relocated its corporate headquarters to its current New York City office. The U.S. is where we conduct our business, generate the majority of our revenue, and where all of our Partners and SFR Partners are domiciled. The mailing address of our principal executive office is 335 Madison Ave, New York, NY 10017, telephone number +1 646-710-7714. Our office in Tel-Aviv, Israel is Azrieli Sarona Bldg, 54th Floor, 121 Derech Menachem Begin, Tel-Aviv, 6701203, Israel, telephone number +972 (3) 715 0920. Pagaya was founded with the goal of improving upon legacy underwriting practices in the United States through the use of artificial intelligence (“AI”)-powered technology and data science. We have built and continue to enhance a network connecting financial institutions and their customers with investors, which is designed to facilitate greater access to financial products and services for consumers. Our business began in personal loans and has expanded to auto loans, point-of-sale and single-family rental (“SFR”). Our website address is www.pagaya.com. Material information is disclosed on our website in the “Investor Relations” section. Accordingly, the investment community, including investors, prospective investors, and sell-side analysts, can monitor such sections of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by reference herein. We have included our website address in this Annual Report solely for informational purposes. Our SEC filings are available on the SEC’s website at http://www.sec.gov. This site contains reports and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this annual report and is not incorporated by reference herein. Recent Developments Senior Notes and New Revolving Credit Facility On July 28, 2025, the Company, through Pagaya US Holding Company LLC (“Pagaya US”), a wholly-owned subsidiary of the Company, issued $500 million aggregate principal amount of 8.875% Senior Unsecured Notes due 2030 (the “2030 Notes”). The 2030 Notes will accrue interest at a rate of 8.875% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2026. The 2030 Notes will mature on August 1, 2030, unless earlier repurchased or redeemed. The 2030 Notes will be redeemable at the option of Pagaya US. At any time prior to August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the 2030 Notes plus a make-whole premium described in indenture governing the 2030 Notes (the “2030 Notes Indenture”), plus accrued and unpaid interest, if any, to, but not including, the redemption date. On and after August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at the redemption prices set forth in the 2030 Notes Indenture. In July 2025, the Company fully paid off the outstanding principal balance under the Credit Agreement using the proceeds from the issuance of 2030 Notes. For additional information, see “Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” On October 1, 2025, the Company refinanced the Revolving Credit Facility by way of terminating the Credit Agreement and entering into a new three-year revolving credit facility (the “2025 Revolving Credit Facility”) with a syndicate of financial institutions. The 2025 Revolving Credit Facility provides a committed borrowing capacity of $132 million. Borrowings under the 2025 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to 1.00% floor) plus a margin of 2.50% or (ii) an adjusted term SOFR (subject to 1.00% floor) plus a margin of 3.50%, a reduction from the prior revolving credit facility’s rate of SOFR plus 7.50%. A commitment fee accrues on any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions. In December 2025, the Company repurchased approximately $6.9 million in aggregate principal amount of the outstanding 2030 Notes in several open market transactions. In February 2026, the Company repurchased additional $7.4 million aggregate principal amount of the outstanding 2030 Notes. The Company funded the repurchases using cash from its balance sheet. The Table of Contents 1
Company evaluated the repurchases as part of its ongoing capital allocation strategy and determined that the repurchases at such market prices represented an attractive use of capital, given the significant discount to par value. The Company may, from time to time, seek to make additional open market repurchases. Such repurchases or other liability management exercises, if any, will be limited in size and made upon such terms and at such prices and sizes as the Company may determine, and will depend on prevailing market conditions, the Company’s liquidity requirements and other factors. Capital Expenditures For a description of our principal capital expenditures and divestitures for the three years ended December 31, 2025 and for those currently in progress, see “Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources.” Business Overview Our Business Pagaya’s mission is to deliver more financial opportunity to more people, more often. We believe our mission will be accomplished by becoming the trusted lending technology partner for the consumer finance ecosystem, with an expansive product suite that serves lenders and institutional investors (the fee-generating side of our business), fueled by effective and efficient capital and risk management (the capital efficiency side of our business). Both sides of our business work together harmoniously to meet the complex needs of leading financial institutions, enabling increased access to credit for consumers. We are a product-focused technology company that deploys sophisticated data science and proprietary, AI-powered technology to enable better outcomes for financial institutions, their existing and potential customers, and institutional or sophisticated investors. Since our inception, our network has processed more than $3.6 trillion in loan applications across our consumer credit asset classes. We believe the combination of high application volume and real-time data flow enables us to enhance the accuracy and predictive power of our Al technology and rapidly adjust to evolving market conditions and consumer trends. This scale creates a powerful flywheel effect: incremental training data points from new applications, Partners, and asset classes enable enhanced intelligence, which drives better results for our Partners and investors, leading to further network growth. While our business began with a focus on our flagship decline monetization lending product in the personal loan market, we have made significant investments in technology and infrastructure to expand our capabilities into new markets, such as auto loans and point-of-sale (POS) financing. We integrate with our Partners via APIs, requiring limited upfront investment and resulting in minimal latency in the processing of applications. This seamless connectivity allows us to act as a comprehensive utility for lenders, helping them serve more customers through a diverse range of products. Our Product Ecosystem We have expanded our platform beyond our foundational decline monetization capability into a comprehensive, multi-product ecosystem. These offerings allow our Partners to engage customers at different stages of the lending lifecycle—from initial marketing and application to real-time point-of-sale assessment. Our suite of products is categorized by asset class and function: Table of Contents 2
Product Product Description Personal Loan Auto Loan Point-of- Sale Decline Monetization Our flagship product allows Partners to automatically send rejected loan applications to our network for a "second look." This enables Partners to approve customers they would otherwise decline, increasing conversion rates without incremental risk. ✔ ✔ ✔ Dual Look Unlike the traditional second-look model where we review only declined applications, Dual Look allows us to assess applications concurrently with our Partners in real time. This parallel evaluation enables Partners to instantly present competitive offers to a wider universe of borrowers, increasing overall capture rates. ✔ ✔ First Look First Look routes designated segments of loan applications to our network for evaluation before the Partner reviews it. This allows Partners to efficiently manage their application flow and optimize their underwriting resources while providing rapid decisioning for consumers. ✔ Affiliate Optimizer Engine This customer acquisition tool enables Partners to originate loans through third-party affiliate channels more efficiently. By leveraging our AI network to price and underwrite traffic from these aggregators, Partners can maximize their return on acquisition spend and scale volumes outside of their organic channels. ✔ Direct Marketing Engine Designed for proactive growth, this product utilizes our data network to help Partners target and acquire new customers through direct channels (emails and direct mail), expanding their reach beyond inbound applicants. ✔ FastPass FastPass is designed to accelerate the transaction process. By removing friction from the verification steps for qualified borrowers, this product improves the customer experience while maintaining credit discipline. ✔ ✔ Financing Vehicles Investors can invest in funds, securitization vehicles managed, sponsored and/or administered by Pagaya, special purpose vehicles established by third-party investors to facilitate the purchase of assets under forward flow agreements, and other similar vehicles (together, “Financing Vehicles”). These funds and vehicles offer financial instruments based on underlying assets that have been originated by Partners through our network with the assistance of our AI technology. Investors in our Financing Vehicles range from large institutional investors, such as pension funds, sovereign wealth funds, and asset management firms, to high-net-worth individuals and family offices. We believe these investors benefit from the diversity of investment opportunities offered through our network, which include different classes of consumer credit and real estate assets originated by multiple financial institutions with the assistance of our AI technology. Certain investors who invest in our Financing Vehicles are related parties and agreements with such related parties are described in “Certain Relationships and Related Person Transactions” included elsewhere in this Annual Report. For information on how we earn revenue, see “Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations—Revenue.” For geographical revenue, see Note 19 to our consolidated financial statements included elsewhere in this Annual Report. Industry Overview Siloed Data and Technology Infrastructure Hinder Financial Services Providers We believe that legacy systems create inefficient outcomes for financial services providers and their customers. Consumers desire convenient access to a broad array of financial products, yet many are locked out of access to the financial ecosystem as a product of the limitation of legacy methods of customer credit evaluation. Financial services providers are primarily reliant on their own data history and experience coupled with traditional lagging methodologies for creditworthiness. For example, the FICO score, which was invented in 1989, is used by over 90% of financial services providers. While a FICO score is rarely used in isolation, many credit evaluation methods are similarly rules-based systems with limited inputs. Lenders’ Investments May Favor Brand and User Experience Over Evolving Credit Underwriting and Automation Table of Contents 3
While financial services providers invest in the development and growth of their businesses, there are a number of competing priorities for the use of these investment dollars. Financial services providers are typically consumer-facing businesses. For this reason, investments in brand and user experience are often prioritized over investments in improvements in underwriting, credit decision-making and automation. Investment in Automation As banking becomes more open, financial services providers are seeking to leverage transaction data to improve verification of consumer assets, income, employment, identity and credit history. In addition, financial services providers are investing in technology to help them harness this data to drive automated workflows that reduce the number of manual tasks. We believe that a digital-only experience is increasingly required to engage with customers and that our product allows our Partners to provide this desired experience to their customers. Our Growth Strategies Accelerate Product-Led Growth Our strategy for the next phase of our development is centered on product-led growth. We are focused on perfecting and expanding our suite of solutions—such as Direct Marketing Engine, Affiliate Optimizer, and FastPass—to solve fundamental challenges for lenders. By productizing our capabilities into plug-and-play solutions, we aim to become a necessary utility for lenders across the U.S., allowing them to serve more customers with improved experiences. We believe this approach creates a compounding flywheel effect: solving specific partner needs strengthens our product ecosystem, and enhancing product effectiveness deepens every partner relationship in return. Deepen and Institutionalize Partner Relationships We are focused on expanding our relationships with existing Partners by transitioning them from single-product users to multi- product Partners. By cross-selling additional products and features—such as deploying Decline Monetization alongside Affiliate Optimizer—we enable Partners to capture volume at multiple stages of the lending lifecycle. Furthermore, we are actively working to institutionalize these relationships through long-term agreements that establish stability and commitments around flow size, quality, and controls, mitigating the impact of cyclical changes in credit appetite. Expand Our Network to New Enterprise Lenders We continue to onboard new, high-potential Partners across our core asset classes of Personal Loans, Auto, and Point-of-Sale (POS). Our onboarding pipeline includes leading banks and fintechs looking to support and scale existing businesses or launch new asset classes. We leverage pre-built integrations for our full suite of products to accelerate the scaling process for new Partners, validating our product-market fit and value proposition. Drive Capital Efficiency and Sustainable Profitability We remain committed to building a through-the-cycle business capable of withstanding fluctuations in the macroeconomic environment. This involves maintaining disciplined underwriting while diversifying our funding sources to include asset-backed securitizations (ABS), forward flow agreements, and strategic private placements. We intend to continue optimizing our capital structure and improving unit economics to support long-term, profitable growth. Our Team Our people are a key reason for our success and are essential for our continued growth. Our team-oriented approach, entrepreneurial culture and overall growth trajectory, together with our competitive compensation and benefits, enable us to successfully retain our employees and to effectively recruit new talent aligned with our vision. As of December 31, 2025, we had a total of 518 “Pagayans,” or team members across the globe. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We are deeply committed to diversity, inclusion and belonging. Our core goals in this area include becoming an equitable employer of the future, creating an open and equitable consumer banking ecosystem and demonstrating social impact and community investment. To achieve these goals, we cultivate diverse talent pipelines and partner with organizations committed to promoting racial equity and greater accessibility in the financial services ecosystem. Table of Contents 4
Our Competition We compete with a variety of technology companies that seek to help financial services providers with the digital transformation of their businesses, particularly with respect to all-digital lending. We also compete with various “second-look” financing providers that offer lenders revenue when they approve applications that had otherwise been turned down. These second-look financing providers operate across markets in which we currently operate or plan to operate in the future. In sourcing asset investors, we compete with asset originators that utilize capital markets for financing. This includes other fintech lenders and asset management firms in the asset-backed security, structured products, and private funds. We may also face competition from other financial institutions, such as banks, investment funds and credit unions, which provide their balance sheet as a source for funding assets. In our real estate business, we compete with companies that invest in single-family rental properties, including those that rely on the capital markets for financing. We also face competition from real estate technology companies and traditional real estate management firms, as well as traditional real estate brokerage firms and agents, some of which operate nationally and others that are limited to a specific region or regions. We believe the following competitive factors are key strengths of our business: • A scalable product with significant growth potential and success to date, with expansion to 30+ U.S. lenders • Upfront funding model for loans generated with the assistance of our AI technology that supports optimization of investor returns • Vast dataset on U.S. consumer behavior, economic and demographic trends • Real-time processing with API-based integration and minimal latency for Partners and their customers • Seamless experience for our Partners’ customers • Strong Partner relationships with 100% historical retention since inception • Deep, well-established relationships with large institutional investors • Streamlined, tech-enabled access to multiple markets • Lean/nimble organization without the bureaucracy of larger financial institutions • Culture of growth and innovation Intellectual Property Our proprietary, developed technology, which includes deep learning methodologies, our assembled workforce, partner relationships, trade names, data asset, unpatented trade secrets, pending trademarks and domain names are key to our success. We rely on trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to protect our proprietary technology. We also rely on a number of pending and registered trademarks to protect our brand. In addition, we require our employees and independent contractors involved in development of intellectual property on our behalf to enter into agreements acknowledging that all works or other intellectual property created or conceived by them on our behalf are our property, and assigning to us any rights, including intellectual property rights, that they may claim or otherwise have in those works or property, to the extent allowable under applicable law. As of December 31, 2025, our intellectual property portfolio included 10 registered and pending trademarks and one patent pending. We are also a party to various license agreements with third parties that typically grant us the right to use certain third- party technology in conjunction with our proprietary technology. Government Legislation and Regulation Our Partners and prospective Partners are highly regulated and are generally required to comply with stringent regulations in connection with performing business functions that our products and services address. Additionally, we facilitate compliance with these regulatory requirements. Although we currently operate our business in an effort to ensure our business itself is not subject to extensive regulation, there is a risk that certain regulations could become applicable to us, including as we expand the functionality and use of our proprietary technology and network. In addition, we and our Partners, vendors, and other service providers must comply with laws and regulatory regimes that apply to us directly and our Partners, vendors, and other service providers indirectly, including through certain of our products and services, and in areas such as consumer finance and lending, investment advisory and securities law, and data protection, use and cybersecurity, and through our relationships with our Partners, the Financing Vehicles, and asset investors. Table of Contents 5
In particular, certain statutes, laws, regulations and rules to which we, our Partners, the Financing Vehicles or their service providers are subject to, and we facilitate compliance with, include, among others: • foreign, U.S. federal and state lending statutes and regulations that require certain parties, including our Partners, to hold licenses or other government approvals or filings in connection with specified activities, and impose requirements related to marketing and advertising, transaction disclosures and terms, fees and interest rates, usury, credit discrimination, credit reporting, service member relief, debt collection, repossession, unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, conduct in connection with data breaches and money transmission; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act, and similar state and municipal fair lending laws; • foreign, U.S. federal and state securities laws, including, among others, the Securities Act, the Exchange Act, the Investment Advisers Act, and the Investment Company Act rules and regulations adopted under those laws, and similar foreign and state laws and regulations, which govern securities law, advisory services, Financing Vehicles or how we purchase consumer credit assets, the Israeli Joint Investment Law, the Israeli Securities Law and loan product regulations; • foreign, U.S. federal and state laws and regulations addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection and processing of certain types of data, including, among others, FCRA, GLBA, Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, CAN-SPAM, Canada’s Anti-Spam Law, TCPA, FTC Act, CCPA and GDPR; • the Fair Credit Reporting Act and Regulation V promulgated thereunder, which impose certain obligations on users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining or using consumer reports, taking adverse action on the basis of information from consumer reports, the accuracy and integrity of furnished information, addressing risks of identity theft and fraud and protecting the privacy and security of consumer reports and consumer report information and other related data use law and regulations; • the Gramm-Leach-Bliley Act and Regulation P promulgated thereunder, which include limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances require financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and require financial institutions to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other privacy laws and regulations; • the U.S. credit risk retention rules promulgated under the Dodd-Frank Act, which require a securitizer of securitization vehicles to retain an economic interest in the credit risk of the assets collateralizing the securitization vehicles, or similar foreign rules (including in the EU); • the Truth in Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their consumer credit obligations, require creditors to comply with certain practice restrictions, limit the ability of a creditor to impose certain terms, impose disclosure requirements in connection with credit applications and solicitations and impose disclosure requirements in connection with credit advertising; • Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive, unconscionable, unlawful or abusive acts or practices; • the Credit Practices Rule, which (i) prohibits creditors from using certain contract provisions that the Federal Trade Commission has found to be unfair to consumers; (ii) requires creditors to advise consumers who co-sign obligations about their potential liability if the primary obligor fails to pay; and (iii) prohibits certain late charges; • the FDIC, OCC and other regulatory guidance related to model risk management and management of vendors and other bank specific requirements pursuant to the terms of service agreements with banks and the examination and enforcement authority of the FDIC under the Bank Service Company Act; • U.S. federal and state regulation and licensing requirements related to the auto insurance and finance industries, including related to being a manager general agent; • the U.S. Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; • the Servicemembers Civil Relief Act, which allows military members to suspend or postpone certain civil obligations, requires creditors to reduce the interest rate to 6% on loans to military members under certain circumstances, and imposes restrictions on enforcement of loans to servicemembers, so that military members can devote full attention to military duties; Table of Contents 6
• the Military Lending Act, which requires those who lend to “covered borrowers,” including members of the military and their dependents, to only offer Military APRs (a specific measure of all-in-cost-of-credit) under 36%, prohibits arbitration clauses in loan agreements, and prohibits certain other loan agreement terms and lending practices in connection with loans to military servicemembers, among other requirements, and for which violations may result in penalties including voiding of a loan agreement; • the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require creditors and loan servicers to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • the Right to Financial Privacy Act and similar state laws enacted to provide the financial records of financial institution customers a reasonable amount of privacy from government scrutiny; • the Bank Secrecy Act and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • the regulations promulgated by OFAC under the U.S. Treasury Department related to the administration and enforcement of sanctions against foreign jurisdictions and persons that threaten U.S. foreign policy and national security goals, primarily to prevent targeted jurisdictions and persons from accessing the U.S. financial system; and • other foreign, U.S., federal, state and local statutes, rules and regulations. In addition to the laws, regulations, and rules that apply to our Partners, and that we facilitate compliance with, we, in our capacity as a service provider to financial services providers, and our Partners, vendors, and other service providers, may be deemed to be subject to certain laws, regulations, and rules through our relationships with our Partners and asset investors. We are also subject to a variety of laws, rules, and regulations relating to the real estate and auto insurance industries, and data security, cybersecurity, privacy, and consumer protection. See “Item 1A.—Risk Factors—Risks Related to Our Legal and Regulatory Environment” for additional information with respect to our regulatory risks. Organizational Structure Refer to Exhibit 21.1 to this Annual Report for a list of our subsidiaries, including our significant subsidiaries. RISK FACTOR SUMMARY The following is a summary of the principal risks that could significantly and negatively affect our business, prospects, financial conditions, or operating results. For a more complete discussion of the material risks facing our business, see “Item 1A.—Risk Factors”: Risks Related to the Operations of Our Business • We are a rapidly growing company, which may result in increased risks, uncertainties, expenses and difficulties, and it may be difficult to evaluate our future prospects. • Our revenue and FRLPC growth rate and financial performance in recent periods may not be indicative of future performance and such growth may slow or reverse over time. • If we fail to effectively manage our growth, our business, financial condition, and results of operations could be adversely affected. • We have incurred U.S. GAAP net losses, and we may not be able to achieve profitability in the future. • Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity. • Our business, financial condition and results of operations could be adversely affected as a result of an unexpected failure of a vendor, bank or other third party service provider that presents concentration risks to us or our Partners. Table of Contents 7
• We are heavily dependent on our AI technology. If we are unable to continue to improve our AI technology or if our AI technology does not operate as we expect, contains errors or is otherwise ineffective, we could improperly evaluate products, not be able to process the volume we have historically, and our growth prospects, business, financial condition and results of operations could be adversely affected. • We rely on our Partners to originate assets with the assistance of our AI technology. Currently, a limited number of Partners account for a substantial portion of our Network Volume, the financial products facilitated with the assistance of our AI technology, and, ultimately, our Revenue. If these Partners were to cease or limit operations with us, our business, financial condition and results of operations could be adversely affected. • If we are unable to both retain existing Partners and attract and onboard new Partners, our business, financial condition and results of operations could be adversely affected. • Our ability to raise capital from asset investors is vital to our ability to offer products to Partners. • A reduction in fee revenues earned from Financing Vehicles could have an adverse effect on our results of operations. • Our AI technology has not yet been extensively tested during different economic conditions, including down-cycles. • A significant portion of our current revenues are derived from Financing Vehicles that acquire consumer credit assets and related financial products, and as a result, we are particularly susceptible to fluctuations in consumer credit activity and the capital markets. • If our estimates, judgments or assumptions relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected. • We are subject to risks related to our dependency on our Founders, key personnel, employees and independent contractors, including highly-skilled technical experts, as well as attracting, retaining and developing human capital in a highly competitive market. • The funding component of our business related to the Financing Vehicles is highly competitive. • We have historically, and may in the future, need to raise additional funds, including but not limited to, through equity, debt, secured borrowings, or convertible debt financings, to support business growth, and those funds may be unavailable on acceptable terms, or at all. As a result, we may be unable to meet our future capital requirements, which could limit our ability to grow and jeopardize our ability to continue our business. • We actively evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets. We may not be able to realize the potential benefits of any such future business investments or acquisitions, and we may not be able to successfully integrate an acquisition, which could hurt our ability to grow our business. • A disruption or failure in services provided by third parties could materially and adversely affect our business. • We are exposed to risks relating to our incorporation and location in Israel. • We could be adversely affected by the soundness of other financial institutions. Risks Related to Technology, Intellectual Property and Data • Regulators may assert, and courts may conclude, that certain uses of AI technology leads to unintentional bias or discrimination. • Our proprietary AI technology relies in part on the use of our Partners’ borrower data and third-party data, and if we lose the ability to use such data, or if such data contains gaps or inaccuracies, our business could be adversely affected. • Cyberattacks, security breaches or similar events may compromise of our information technology systems, or those of third parties upon which we rely, or our data could adversely impact our brand and reputation and our business, operating results and financial condition. Table of Contents 8
• Our Financing Vehicles rely on third-party service providers for a substantial portion of our business activities and for Financing Vehicles, and any disruption of service experienced by such third-party service providers or our failure to manage and maintain existing relationships or identify other high-quality, third-party service providers could harm our reputation, business, results of operations and growth prospects. Risks Related to our Single Family Rental (“SFR”) Operations • If we fail to continuously innovate, improve and expand the technology we use in our SFR operations, including Darwin’s property management platform, our business, financial condition and results of operations could be negatively impacted. • The SFR market is highly competitive, and we may be unable to compete successfully against our existing and future competitors. • The success of our SFR operations depends on general economic conditions, the health of the U.S. real estate industry generally, and risks generally incident to the ownership and leasing of single-family rental real estate, and our SFR operations may be negatively impacted by economic and industry downturns, including seasonal and cyclical trends, and volatility in the single-family rental real estate lease market. • We are subject to payment-related and leasing fraud from tenants and an increase in or failure to deal effectively with fraud, fraudulent activities, fictitious transactions, or illegal transactions. • Our SFR Partners face significant competition in the leasing market for quality residents, which may limit the ability to lease our single-family homes on favorable terms. • Compliance with governmental laws, regulations, and covenants that are applicable to our SFR Partners’ properties or that may be passed in the future, including affordability covenants, permit, license, and zoning requirements, may adversely affect our ability to manage customer properties and could adversely affect our growth strategy.Risks Related to Our Legal and Regulatory Environment • Litigation, regulatory actions, consumer complaints and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses. • If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements, our activities may be restricted, and our ability to conduct business could be materially adversely affected. • If obligations by one or more Partners that benefit from our network were subject to successful challenge that the Partner was not the “true lender,” such obligations may be unenforceable, subject to rescission or otherwise impaired, we or other program participants may be subject to penalties, and/or our commercial relationships may suffer, each of which would adversely affect our business, financial condition and results of operations. • The CFPB has at times taken expansive views of its authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new government agency could adversely affect our business, financial condition and results of operations. Item 1A. Risk Factors In addition to the other information contained in this Annual Report, including the matters addressed under the heading “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors in this Annual Report before investing in our securities. Certain factors may have a material adverse effect on our business, financial conditions and results of operations. The risks and uncertainties described below disclose both material and other risks and uncertainties, and are not intended to be exhaustive and are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe to be immaterial also may materially adversely affect our business, financial condition, results of operations and cash flows in future periods or are not identified because they are generally common to businesses. If any of these risks occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the trading price of our Class A Ordinary Shares could decline, and you could lose part or all of your investment. Unless otherwise noted or the context otherwise requires, all references in this section to the “Company,” “we,” “us” or “our” refer to the business of Pagaya. Table of Contents 9
Risks Related to the Operations of Our Business We are a rapidly growing company, which may result in increased risks, uncertainties, expenses and difficulties, and it may be difficult to evaluate our future prospects. We were founded in 2016 and have experienced rapid growth in recent years in the markets we serve and we plan to continue to expand our product offerings and in existing and new markets. Assessing our business and future prospects may be difficult because of the risks and difficulties we face. These risks and difficulties include our inability to: • maintain cost-effective access to capital and a diversified asset funding strategy; • improve the effectiveness, predictiveness and performance of our AI technology; • successfully adjust our proprietary AI technology, products and services in a timely manner in response to changing macroeconomic conditions, including consumer credit performance, fluctuations in the credit markets, the recent increase in interest rates and the wind-down of stimulus programs; • maintain and increase the volume of financial products facilitated with the assistance of our AI technology; • enter into new and maintain existing relationships with Partners; • expand the use and applicability of our AI technology; • successfully build our brand and protect our reputation from negative publicity; • successfully compete with companies that are currently in, or may in the future enter, the business of providing technological services to enhance the access to credit for customers and funding services; • enter into new markets and introduce new products and services to new or existing partners; • comply with and successfully adapt to complex and evolving legal and regulatory environments in our existing markets and ones we may enter in the future; • effectively secure and maintain the confidentiality of the information received, accessed, stored, provided and used across our systems; • successfully obtain and maintain funding and liquidity to support continued growth and general corporate purposes; • successfully manage rollover risk, and contractual and contingent liquidity outflow risks related to our financing facilities; • attract, integrate and retain qualified employees and independent contractors; and • effectively manage, scale and expand the capabilities of our teams, outsourcing relationships, third-party service providers, operating infrastructure and other business operations. If we are not able to timely and effectively address these risks and difficulties as well as those described elsewhere in this “Risk Factors” section, our business, financial condition and results of operations may be harmed. Our revenue and FRLPC growth rate and financial performance in recent periods may not be indicative of future performance and such growth may slow over time. In addition, the historical returns attributable to the Financing Vehicles should not be indicative of the future results of the Financing Vehicles and poor performance of the Financing Vehicles would likely cause a decline in our revenue, net income and cash flow. We have grown rapidly over the last several years, and our recent revenue and FRLPC growth rate and financial performance may not be indicative of our future performance. Our revenue and other income was $1,301.4 million and $1,032.2 million for the years ended December 31, 2025 and December 31, 2024, respectively, representing a 26% growth rate. For the years ended December 31, 2025 and December 31, 2024, we generated net income (loss) attributable to shareholders of $81.4 million and $(401.4) million, respectively, and Adjusted EBITDA of positive $371.0 million and $210.4 million, respectively. The Adjusted EBITDA increase for the year ended December 31, 2025 as compared to the prior year period reflects the impact of (i) FRLPC improvement initiatives we implemented in 2025, and (ii) disciplined cost management to improve operating efficiency and reduce vendor-related expenses in 2025. We intend to continue to make investments to support our business growth and those investments along with the potential for more challenging macroeconomic conditions could negatively impact our net income (loss) attributable to shareholders and Adjusted EBITDA. Our revenue for any previous quarterly or annual period may not be a reliable indicator of our revenue or revenue growth in future periods. As our business has grown, our revenue growth rates have slowed and may continue to slow, and or our revenue may decline, in future periods for a number of reasons, which may include slowing demand for our AI technology offerings, products and services, increasing competition, a decrease in our ability to access capital or the growth of our network, increasing regulatory costs and challenges, adverse changes in the macroeconomic environment and consumers’ ability to service their debt and our failure to capitalize on growth opportunities. Further, we believe our growth over the last several years has been driven in large part by the expansion across similar consumer credit assets, which may slow. In addition, we believe this growth has been driven in part by the transformative shift by consumers to e-commerce and the acceptance of online networks and digital Table of Contents 10
solutions for the use of and access to financial products that we expect may slow down over time, and as a result, our financial performance may be adversely affected. We have established Financing Vehicles, certain of which have a limited track record, which may make our business difficult to evaluate. The historical and potential future returns of the Financing Vehicles are not directly linked to returns on Pagaya Ordinary Shares. Therefore, any positive performance of the Financing Vehicles will not necessarily result in positive returns on an investment in Pagaya Ordinary Shares. However, poor performance of the Financing Vehicles would likely cause a decline in our revenue, net income/loss and cash flow from such Financing Vehicles, and would likely negatively affect our ability to raise additional capital for the same or future Financing Vehicles, and would therefore have a negative effect on our performance and, in all likelihood, the returns on an investment in Pagaya Ordinary Shares. Moreover, we have incurred and could experience additional losses related to our risk retention holdings as a result of poor investment performance by the Financing Vehicles. As a result of ABS issuances during 2025, our risk retention holdings have increased during 2025. Accordingly, the magnitude of potential losses has also increased. The future rate of return for any current or future Financing Vehicles may vary considerably from the historical rate of return generated by any particular Financing Vehicle, or for the Financing Vehicles as a whole. Poor performance of the Financing Vehicles could make it more difficult for us to raise new capital. Asset investors might decline to invest in future Financing Vehicles we raise, and asset investors in existing Financing Vehicles might withdraw their investments, as a result of poor performance of the Financing Vehicles in which they are invested. In fact, over the last few years certain of our fund Financing Vehicles experienced a marked increase in redemption requests, which were satisfied with either cash or “in kind,” using participation interests, as permitted under the Financing Vehicle’s organizational documents. Accordingly, poor performance may deter future investment in Financing Vehicles and thereby decrease the capital invested in the Financing Vehicles and, ultimately, our fee revenue, net income/loss and cash flow. If we fail to effectively manage our growth, our business, financial condition, and results of operations could be adversely affected. In addition, we may from time to time undertake internal corporate reorganizations that may adversely impact our business and results of operations. Over the last several years, we have experienced rapid growth in our business and the number of employees and independent contractors, and we may continue to experience growth in the future. This rapid growth has placed, and may continue to place, significant demands on our management, processes, systems and operational, technological and financial resources. Our ability to manage our growth effectively, integrate new employees, independent contractors and technologies into our existing business and attract new Partners and maintain relationships with existing Partners will require us to continue to retain, attract, train, motivate and manage employees and independent contractors and expand our operational, technological and financial infrastructure. We may need to undertake workforce reductions or restructuring activities in the future. If we do, we will incur expenses associated with the separation with those employees. We may also incur additional expenses due to events associated with the reduction in workforce, for example, the reduction in workforce may have a future impact on other areas of our liabilities and obligations, which could result in losses in future periods. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. Furthermore, any reduction in workforce may be disruptive to our operations. For example, our workforce reduction could yield unanticipated consequences, such as attrition beyond planned staff reductions, increased difficulties in our day-to-day operations and reduced employee morale. If employees who were not affected by the reduction in workforce seek alternative employment, this could result in unplanned additional expense to ensure adequate resourcing or harm our productivity. Any workforce reduction could also harm our ability to attract and retain qualified management, sales and marketing personnel who are critical to our business. Any failure to attract or retain qualified personnel could adversely affect our business. From time to time, we rely on temporary independent contractor programs for various aspects of our business. Failure to effectively implement and manage such programs could result in misclassification or other employment-related claims or inquiries by governmental agencies. Continued growth could strain our ability to develop and improve our operational, technological, financial and management controls, reporting systems and procedures, recruit, train and retain highly skilled personnel, obtain cost-effective funding and maintain Partners’ and their customers’ satisfaction. Any of the foregoing factors could negatively affect our business, ability to obtain cost-effective funding, financial condition, and results of operations. From time to time, we have undertaken, and may undertake again, internal corporate reorganizations in an effort to simplify our organizational structure, streamline our operations or for other operational reasons. Such internal reorganization involves and may involve, among other things, the combination or dissolution of certain of our existing subsidiaries and the creation of new subsidiaries. These transactions could be disruptive to our business, result in significant expense, require regulatory approvals, and fail to result in the intended or expected benefits, any of which could adversely impact our business and results of operations. Table of Contents 11
Our business and the performance of Financing Vehicles may be adversely affected by economic conditions and other factors that we cannot control. These factors include interest rates, rising inflation, the instability of the banking system, acts of war, supply chain disruptions, labor shortages, the wind-down of stimulus programs, unemployment rates, conditions in the housing market, immigration policies, government shutdowns, trade wars or other impacts of tariffs and delays in tax refunds, as well as events such as natural disasters, terrorism, catastrophes, and pandemics. Uncertainty and negative trends in general economic conditions, including significant tightening of credit markets, historically have created a difficult operating environment for us, our Partners and their respective customers, and our asset investors. Many factors, including factors that are beyond our control, may impact our results of operations or financial condition and our overall success by affecting our access to capital. Challenges our Partners may face with low demand for their financial products or willingness or capacity of their customers to make payment on obligations, or the returns on other assets, may affect the success of the Financing Vehicles. For example, the personal loans acquired from our Partners are, for the most part, unsecured, and our Partners’ customers may not prioritize repayment of those loans in an economic downcycle. These factors include interest rates, rising inflation, supply chain disruptions, labor shortages, weakening exchange rates, unemployment levels, conditions in the housing market, immigration policies, government shutdowns, trade wars and delays in tax refunds, as well as events such as natural disasters, acts of war (including the ongoing conflict in the Middle East and the ongoing Russia Ukraine conflict), terrorism, catastrophes and pandemics. We face a heightened level of interest rate risk at times when the U.S. Federal Reserve Board (the “FRB”) reverses its quantitative easing program and/or increases interest rates in an effort to reduce the level of inflation in the U.S. economy. Although the conflict in Israel has not materially impacted our business or operations as of the date of this Annual Report, its persistence and potential escalation continue to create uncertainty, with possible long-term consequences including heightened regional instability, energy market disruptions, and adverse effects on macroeconomic conditions and financial markets. For more information, see “—Conditions in Israel and relations between Israel and other countries could adversely affect our business, including current uncertainty and instability resulting from the war between Israel and various terrorist organizations, as well as other regional hostilities.” High interest rates could unfavorably impact demand for all refinancing loan activities and reduce demand across personal loans and home loans, including, but not limited to, any variable-rate loan products, as well as adversely impact the spending levels of borrowers and their ability and willingness to borrow money. The growth of the personal lending market has benefited from historically low interest rates and higher interest rates could slow the growth of this market and our growth could be negatively impacted. Higher interest rates often lead to higher payment obligations, which may reduce the ability of borrowers to remain current on their loan obligations and therefore, lead to increased delinquencies, defaults, customer bankruptcies, charge-offs, and decreasing recoveries, all of which could have a material adverse effect on our business. Any impact to investor returns may lead to an adverse impact on our ability to raise capital which could negatively impact earnings. If the risk-free rate of return increases, investor demand for risk assets, such as consumer credit, may be impacted, which may constrain our ability to raise new funding for loan originations and have a negative impact on our results of operations. While we continue to raise new funding, the cost of capital can be expected to increase in higher interest rate environments. In addition, major medical expenses, divorce, death or other issues that affect borrowers could affect a borrower’s willingness or ability to make payments on their loans. If borrowers default on loans, the cost to service these loans may also increase without a corresponding increase in fees and the value of the loans held by our funds and financing vehicles could decline. Higher default rates by these borrowers may lead to lower demand by Partners, which would adversely affect our business, financial condition and results of operations. Any sustained decline in demand for investment in loans (including through our funds or financing vehicles) or any increase in delinquencies, defaults or foreclosures that result from economic downturns, may adversely affect our business, financial condition and results of operations. While inflationary pressure has eased recently, rising inflation may adversely impact the ability of borrowers to service their debt, which could lead to deterioration of the credit performance of loans and impact investor returns, and therefore may result in lower demand from investors for assets generated on our platform and lead to constraints on our ability to fund new volume origination. In addition, rising inflation may increase our operating costs, including employee compensation and general corporate expenses, which could reduce cash flow and operating income. Although we have not experienced material impacts to our business performance from inflationary pressure, our business may be materially impacted in the future. Failure of the U.S. federal government to manage its fiscal matters or to raise or further suspend the debt ceiling, and changes in the amount of federal debt, may negatively impact the economic environment and adversely impact our results of operations. The U.S. federal government has established a limit on the level of federal debt that the U.S. federal government can have outstanding, often referred to as the debt ceiling. The U.S. Congress has authority to raise or suspend the debt ceiling and to approve the funding of U.S. federal government operations within the debt ceiling, and has done both frequently in the past, often on a relatively short-term basis. Generally, if effective legislation to manage the level of federal debt is not enacted and the debt ceiling is reached in any given year, the federal government may suspend its investments for certain government accounts, among Table of Contents 12
other available options, in order to prioritize payments on its obligations. Contention among policymakers, among other factors, may hinder the enactment of policies to further increase the borrowing limit or address its debt balance timely. A failure by the U.S. Congress to raise the debt limit would increase the risk of default by the U.S. on its obligations, the risk of a lowering of the U.S. federal government’s credit rating, and the risk of other economic dislocations. Such a failure, or the perceived risk of such a failure, could consequently have a material adverse effect on the financial markets and economic conditions in the U.S. and globally. If economic conditions severely deteriorate as a result of U.S. federal government fiscal gridlock, our operations, our Partners or their respective customers, or our asset investors, could be affected, which may adversely impact our financial condition and results of operations. These risks may also impact our overall liquidity, our borrowing costs, or the market price of our ordinary shares. If there is an economic downturn that affects our current and prospective Partners and their customers, asset investors or the performance of the Financing Vehicles, or if we are unable to address and mitigate the risks associated with any of the foregoing, our business, financial condition and results of operations could be adversely affected. Additionally, our AI technology has not been extensively tested during economic downturns. For more information, see “—Our AI technology has not yet been extensively tested during different economic conditions, including down-cycles. We continue to build and refine our AI technology to offer new products and services as we expand into new markets, such as real estate, and if our AI technology does not perform as well in these new markets as it has in our existing business and we are unable to manage the related risks and effectively execute our growth strategy as we enter into these new lines of business, our growth prospects, business, financial condition and results of operations could be adversely affected.” We have incurred U.S. GAAP net losses, and we may not be able to remain profitability in the future. For the years ended December 31, 2025 and 2024, we incurred U.S. generally accepted accounting principles (“U.S. GAAP”) net income (losses) of $81.4 million and $(401.4) million, respectively. We intend to continue to develop and improve our proprietary technology, attract and develop business relationships with new and existing partners, expand our product offerings supported by our AI technology, and otherwise continue to grow our business. Revenue and related fee revenue less production costs growth and cost savings may not keep pace with our continued investments. Failure to increase revenue and FRLPC, maintain cost levels sufficiently to keep pace with our investments, or material fair value losses associated with our investments in risk retention assets could prevent us from generating GAAP net income in the future. If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition and results of operations could be adversely affected. Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity. Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non- performance, could adversely affect our operations and liquidity. The uncertainty in the markets regarding the stability of regional banks and the safety of deposits may have a material adverse effect on our liquidity and financial condition if our ability, and the ability of our Partners, vendors, and other third parties, to access funds at their respective financial institutions and our ability to transfer cash, cash equivalents and investments to another large institutional bank are impaired. Further, such uncertainty may make equity or debt financing more difficult to obtain, and additional equity or debt financing might not be available on reasonable terms, if at all; difficulties obtaining equity or debt financing could have a material adverse effect on our financial condition, as well as our ability to continue to grow our operations. Our business, financial condition and results of operations could be adversely affected as a result of an unexpected failure of a vendor, bank or other third party service provider that presents concentration risks to us or our Partners. We, as well as our Partners, are dependent on a number of third party service providers for our core business and operations, such as our data providers, technology service providers, financial institutions, and other third party service providers. If a third party on which we or our Partners depends fails to supply the required services, we may not be able to replace those services in a timely manner, on favorable terms, or at all. If we are unable to adequately diversify or otherwise mitigate such concentration risks and such risks come to pass, we could be subject to reduced revenues, increased expenses, or an inability to recover assets which could have a material adverse effect on our financial condition, results of operations, and cash flows. We are heavily dependent on our AI technology. If we are unable to continue to improve our AI technology or if our AI technology does not operate or perform as we expect, contains errors or is otherwise ineffective, our network may improperly evaluate products, not be able to process the volume we have historically, and our growth prospects, business, financial condition and results of operations could be adversely affected. Table of Contents 13
Our ability to enable our Partners to increase the number and quality of loans or other assets that they originate with the assistance of our AI technology will depend in large part on our ability to effectively evaluate the creditworthiness and likelihood of default of our Partners’ customers and, based on that evaluation, help our Partners offer competitively-priced loans or other assets as well as obtain higher approval rates. Further, our overall operating efficiency and margins will depend in large part on our AI technology’s ability to effectively evaluate the creditworthiness, likelihood of default and credit asset pricing for our Partners’ customers, which will affect our Partners’ business volume. In the ordinary course, we enter into contractual arrangements with our Partners with customary indemnification provisions (including for violation of law). Such indemnification provisions potentially assume regulatory liability and liability for claims by Partners or third parties if the AI technology contains errors or incorrectly evaluates Partners’ customers. We further assume liability as the investment manager, sponsor and/or administrator for the Financing Vehicles, including if the AI technology contains errors or incorrectly evaluates the Partners’ customers underlying the assets purchased by the Financing Vehicles. Such liability may result in claims by asset investors or regulatory action. For more information, see the risk factors entitled “If we fail to comply with or facilitate compliance with, or our Partners fail to comply with the variety of federal, state and local laws to which we or they are subject, including those related to consumer protection, consumer finance, lending, fair lending, data protection, and investment advisory services, or if we or our Partners are found to be operating without having obtained necessary state or local licenses, it may result in regulatory action, litigation, or monetary payments or may otherwise negatively impact our reputation, business, and results of operations, and may prevent us from serving users in jurisdictions where those regulations apply,” “Risks Related to Our Legal and Regulatory Environment” and “Any legal proceedings, investigations or claims against us could be costly and time- consuming to defend and could harm our reputation regardless of the outcome. In addition, our business and operations could be negatively affected if they become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our share price.” In addition, we utilize the data gathered from various sources in our automated credit analysis process. The data that we gather is evaluated and curated by our AI technology. The ongoing development, maintenance and operation of our AI technology is expensive and complex, and may involve unforeseen difficulties including material performance problems and undetected defects or errors, for example, with new or existing capabilities incorporating AI. Our proprietary technology uses machine learning models as a subset of our AI, but those models are static and do not have the ability to self-correct, self-improve, and/or learn over time, and therefore any change to the models requires human intervention, testing, validation, and governance approvals. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our AI technology from operating properly. If our AI technology fails to adequately predict the creditworthiness of Partners’ applicants or customers, or to properly place loans or other assets for acquisition by Financing Vehicles due to the design of our models or programming or other errors or failures, other characteristics of our AI or for any other reasons, or any of the other components of the automated credit analysis process fails, we, our Partners and our asset investors may experience higher than forecasted loan and other losses that will in turn negatively impact the performance of the Financing Vehicles that acquire our Partners’ assets. Additionally, errors or inaccuracies in our AI technology could result in exposure to the credit risk of loans or other assets originated by Partners, whether it be exposure for us, Partners or asset investors, which may result in higher than expected losses or lower than desired returns of such loans or other assets. Any of the foregoing could result in our Partners experiencing sub-optimally priced assets, incorrect approvals or denials of transactions, or higher than expected losses, or could require remediation and/or result in our Partners’ dissatisfaction with us, which in turn could adversely affect our ability to attract new Partners or cause our Partners to terminate their agreements with us and decrease our Partners’ financial product volume, and could also negatively impact the performance of Financing Vehicles, certain asset investors’ willingness to invest in future Financing Vehicles, and our ability to continue to create new Financing Vehicles, our ability to source cost-effective capital in our Financing Vehicles and our business, financial condition and results of operations may be adversely affected. Moreover, while broader adoption, use and commercialization of AI is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain. Further, market acceptance, understanding and valuation of solutions and services that incorporate AI technologies is uncertain, and the perceived value of AI technologies used by our Partners could be inaccurate. If AI is not broadly adopted by enterprises to the extent we expect, or if new use cases do not arise, then our opportunity may be smaller than we expect. Such risks and challenges could undermine public confidence in AI, which could low or even halt their adoption and negatively affect our business. We rely on our Partners to originate assets facilitated with the assistance of our AI technology. Currently, a limited number of Partners account for a substantial portion of our Network Volume — the financial products facilitated with the assistance of our AI technology — and, ultimately, our Revenue. If these Partners were to cease or limit operations with us, our business, financial condition and results of operations could be adversely affected. Currently, a majority of the loans or receivables that are facilitated with the assistance of our AI technology result from transactions with a small number of Partners who operate in the financial technology space. These Partners, taken together, Table of Contents 14
originate a majority of the loans or receivables facilitated with the assistance of our AI technology. The fees we earn when these loans or other assets are acquired from these Partners by Financing Vehicles account for a majority of our revenue. We have entered into several types of agreements with each of our Partners. Our commercial arrangements with these Partners are based on the type of asset class. For example, we enter into purchase agreements with our Partners, which provide the Financing Vehicles with the opportunity to acquire assets by the Partner assisted by our AI technology, that have a typical duration of one to three years with the option to extend for additional periods. The Financing Vehicles are not required to acquire specific types or amounts of assets from our Partners under such agreements. In addition, there are servicing agreements with our Partners or third parties covering the assets originated by such Partners that typically last for the life of the asset. As it relates to any specific asset, these servicing agreements require us to continue to use the Partner or their preferred third party that originated the asset for the life of such asset. See “—A disruption or failure in services provided by third parties could materially and adversely affect our business.” In addition, even during the term of our arrangement, our Partner could choose to reduce the volume of loans or other assets facilitated with the assistance of our AI technology or increase the volume that it chooses to fund and retain on its own balance sheet. We or any of our Partners may terminate our arrangement for various reasons, which may include material breaches and change in control, subject to payment of a termination fee in some cases, and Partners could decide to stop working with us, have disputes with us, ask to modify their commercial or legal terms in a manner disadvantageous to us or enter into exclusive or more favorable relationships with our competitors. In addition, capital and leverage requirements applicable to our Partners that are banks or other financial institutions subject to such requirements could result in decreased demand for our products. Further, our Partners’ respective regulators may require that they terminate or otherwise limit their business with us, or impose regulatory pressure limiting their ability to do business with us. We are a service provider to Partners, and due to some of our Partners being regulated by federal and/or state regulators, including the FDIC, we are subject to audit by such Partners in accordance with the relevant guidance related to management of vendors. We are also subject to the examination and enforcement authority of certain of those regulators, including the FDIC under the Bank Service Company Act. If any of our Partners were to stop working with us, suspend, limit or cease their operations or otherwise terminate or modify adversely to us their relationship with us, the number of financial products originated by our Partners with the assistance of our AI technology could decrease and our business, financial condition and results of operations could be adversely affected. If we are unable to both retain existing Partners and attract and onboard new Partners on attractive commercial terms, our business, financial condition and results of operations could be adversely affected. A majority of our revenue is generated through fees we receive when the loans and other financial products originated by our Partners with the assistance of our AI technology are acquired by Financing Vehicles. Currently, we have a small number of Partners that operate in the financial technology space who originate a majority of these loans and other assets. To continue to expand our market share in existing markets and grow into new markets we will need to attract and onboard new Partners on attractive commercial terms and also maintain and grow those relationships. If we are not successful in retaining existing Partners and attracting and onboarding new Partners, our business, financial condition and results of operations could be adversely affected. Our ability to raise capital from asset investors is vital to our ability to offer products to Partners. If we are unable to raise capital from asset investors at competitive rates, or at all, it would materially reduce our revenue and cash flow and adversely affect our financial condition. We have relied upon the securitization market, committed asset-backed facilities, and forward flow agreements to provide a significant portion of the capital needed to purchase Partner assets evaluated and selected using our AI. The ability of the Financing Vehicles to provide funding at competitive rates, or at all, is essential to our business. Our ability to raise capital from asset investors for Financing Vehicles (including our ability to enter into and renew forward flow arrangements with third-party investors who establish such Financing Vehicles) depends on a number of factors, including certain factors that are outside our control. Certain factors, such as the performance of the equity and bond markets and the asset allocation rules or investment policies to which such asset investors are then subject, could inhibit or restrict the ability of asset investors to make investments in Financing Vehicles or the asset classes in which Financing Vehicles invest. An inability to access the securitization market, or a significant reduction in (1) liquidity in the secondary market for securitization transactions, (2) the continued acceptance of our prefunded securitization model, or (3) access to the funding market at all could have an adverse impact on the funding component of our product and, by extension, our financial position and results of operations. In addition, an inability to enter into new or maintain existing forward flow agreements, or a significant reduction in access to the funding market at all could have an adverse impact on the funding component of our product and, by extension, our financial position and results of operations. Our ability to launch new Financing Vehicles could similarly be hampered if the appeal of those investments in the market were to decline. For example, there is a risk that the single-family rental properties that we have invested in have some undiscovered Table of Contents 15
flaw, or would otherwise require additional expenditures to make them rentable in excess of the expected amount, which could result in greater total renovation costs and a loss of revenue. Further, an investment in a share, unit, membership interest or limited partner interest in a Financing Vehicle is more illiquid, especially when the underlying assets (such as consumer credit assets) are illiquid, and the returns on such investment may be more volatile than an investment in securities for which there is a more active and transparent market. In periods of positive markets and low volatility, for example, investors may favor passive investment strategies such as index funds over our actively managed investment vehicles or more liquid assets like equities over consumer credit assets. Alternative investments could also fall into disfavor as a result of concerns about liquidity and short-term performance. In connection with launching new Financing Vehicles or making further investments in existing Financing Vehicles, we may negotiate terms for such Financing Vehicles with existing and potential asset investors. The outcome of such negotiations could result in our agreement to terms that are materially less favorable to us than for prior Financing Vehicles or as compared to Financing Vehicles of our competitors, including by requiring us to maintain a greater share in the risk of loss with respect to fees and/or incentive fees, which could have an adverse impact on our revenues. Such terms could also restrict our ability to raise Financing Vehicles with investment objectives or strategies that compete with existing Financing Vehicles, add additional expenses and obligations for us or increase our potential liabilities, all of which could ultimately reduce our revenues. In addition, certain investors, including sovereign wealth funds and public pension funds, have demonstrated an increased preference for alternatives to the traditional financing vehicle structure. Such alternatives may not be as profitable for us as the traditional fund structure, and such a trend could have a material impact on the cost of our operations or profitability if we were to implement these alternative investment structures. In addition, certain investors, including public pension funds, have publicly criticized certain fee and expense structures, including transaction and advisory fees. Although we have no obligation to modify any of our fees with respect to our existing Financing Vehicles, we may experience pressure to do so in new Financing Vehicles. A reduction in fee revenues earned from Financing Vehicles could have an adverse effect on our results of operations. The growth of the assets of such Financing Vehicles and related fees generated, as well as our ability to deploy capital into investments, would slow or decrease if we are unable to raise new and successor Financing Vehicles, all of which would materially reduce our fee revenues and cash flows and adversely affect our financial condition. A portion of our revenue from Financing Vehicles in any given period is dependent on the size of the assets of such Financing Vehicles in such period and fee rates charged. We may not be successful in producing investment returns and prioritizing services that will allow us to maintain our current fee structure, to maintain or grow the assets of such Financing Vehicles, or to generate performance income. A decline in the size or pace of the growth of assets of Financing Vehicles or applicable fee rates will reduce our revenues. Such a decline may result from a range of factors, including: • Volatile and challenging economic and market conditions, such as global or regional economic downturns or recessions, as well as macroeconomic and policy impacts of political instability and armed conflicts, which could cause asset investors to delay making new commitments to existing or new Financing Vehicles, limit the ability of our existing Financing Vehicles to deploy capital or result in asset investors in our funds submitting redemption requests; • Competition may make fundraising and the deployment of capital more difficult, thereby limiting our ability to grow or maintain the assets of such Financing Vehicles; • Changes in our strategy or the terms of our network AI fees; and • Poor performance of one or more of the Financing Vehicles, either relative to market benchmarks or in absolute terms, or compared to our competitors, may cause asset investors to regard the Financing Vehicles less favorably than those of our competitors, thereby adversely affecting our ability to raise more capital for existing Financing Vehicles or new or successor Financing Vehicles, or result in asset investors submitting redemption requests. If we are unable to develop and maintain diverse and robust funding sources for our network, our growth prospects, business, financial condition and results of operations could be adversely affected. In addition, certain of our funds Financing Vehicles have periodic redemption features and a substantial withdrawal of capital by one or more asset investors, or use of such features, may have an adverse effect on the Financing Vehicles’ performance and our ability to raise new Financing Vehicles. Our business depends on sourcing and maintaining diverse and robust funding to enable loans or other assets from our Partners to be acquired by a Financing Vehicle. The number of asset investors in our markets where a long-term track record of performance has not been developed is often very concentrated. Were the availability of this funding to decrease, our ability to generate Network Volume and revenue will be adversely affected. Furthermore, five of the largest asset investors together contributed 46% of all ABS funding raised in 2025, compared to 54% of all ABS funding raised in 2024. New capital from asset investors may be unavailable on reasonable terms or at all beyond the current maturity dates of Financing Vehicles. Table of Contents 16
Further, events of default or breaches of financial, performance or other covenants, or worse than expected performance of certain pools of obligations underpinning Financing Vehicles, could reduce the likelihood of affiliates sponsoring, managing or administering Financing Vehicles that acquire assets from our Partners. The performance of such assets is dependent on a number of factors, including the predictiveness of our AI technology and social and economic conditions. The availability and capacity of certain asset investors to participate in Financing Vehicles that acquire assets from our Partners also depend on many factors that are outside of our control, such as credit market volatility, politics and regulatory reforms. In the event of a sudden or unexpected disruption of asset investors’ participation in Financing Vehicles that acquire assets from our Partners, our network may not be able to maintain the necessary levels of funding to retain current volume of acquisition by Financing Vehicles of loans or other assets originated by our Partners without incurring substantially higher funding costs, which could adversely affect our business, financial condition and results of operations. A substantial withdrawal of capital by one or more asset investors in any of our private funds with redemption features may have an adverse effect on such private funds’ performance. We may find it difficult under such circumstances to adjust the private funds’ asset allocation to the reduced amount of assets. Moreover, in order to provide sufficient funds to pay withdrawal amounts, the private funds might be required to liquidate positions at an inopportune time or at prices that we believe do not reflect the true value of such investments and that would adversely affect the applicable asset investors, or the adviser may not be able to liquidate such positions at all or it may determine it would be inappropriate to do so. If such withdrawals of capital were to continue over a protracted period of time, these issues may be magnified such that similar assets sold at subsequent withdrawal dates might receive even less favorable liquidation values. Furthermore, if any of our private funds decide to make in-kind distributions, satisfy redemptions in-kind whether through a distribution of a private funds’ assets or the distribution of interests in a vehicle (i.e., a special purpose vehicle) to which all or a portion of a private funds’ assets or interests have been transferred or by some other means, implement a gate or suspend redemptions, any of such actions may have an adverse reputational impact on our ability retain existing capital and/or raise new capital. Withdrawals of capital through redemption may also make it more difficult for such private funds’ to generate the same level of profits operating on a smaller capital base and may trigger defaults, termination events or restrictive or financial covenants under one or more loans, credit facilities or other financing arrangements. Our AI technology has not yet been extensively tested during different economic conditions, including down-cycles. We continue to build and refine our AI technology to offer new products and services as we expand into new markets, such as real estate and point-of-sale, and if our AI technology does not perform as well in these new markets as it has in our existing business and we are unable to manage the related risks and effectively execute our growth strategy as we develop new products, our growth prospects, business, financial condition and results of operations could be adversely affected. We continue to build and refine our AI technology to offer new products and services in new markets, and we expect to continue to expand our offering to other markets. There are substantial risks and uncertainties associated with these efforts. We may invest significant time and resources to develop and market new lines of business and/or products and services and we may not achieve the return on our investment that we expect. Initial timetables for the introduction and development of new lines of business, new asset types or new products or services may not be achieved and price and profitability targets may not prove feasible. Further, we may not be able to develop, commercially market and achieve market acceptance of any new products and services. In addition, our investment of resources to develop new products and services may either be insufficient or result in expenses that are excessive in light of the revenue actually derived from these new products and services. If the profile of consumers using any new products and services is different from that of those currently served by our Partners’ existing financial products, our AI technology may not be able to accurately evaluate the credit risk of such customers, and the affiliates sponsoring, managing or administering Financing Vehicles that are acquiring our Partners’ financial products may in turn experience higher levels of delinquencies or defaults. Failure to accurately predict demand or growth with respect to our new products and services could have an adverse impact on our reputation and business, and there is always a risk that new products and services will be unprofitable, increase our costs, decrease operating margins or take longer than anticipated to achieve target margins. In addition, any new products or services may raise new and potentially complex regulatory compliance obligations, which would increase our costs and may cause us to change our business in unexpected ways. Further, our development efforts with respect to these initiatives could distract management from current operations and divert capital and other resources from our existing business. In addition, while we believe our AI technology will accurately evaluate risk in the non-consumer credit asset markets, our AI technology has not been extensively tested in these markets. If our AI technology is unable to accurately evaluate risk in these markets, our Partners and Financing Vehicles through which asset investors invest may experience greater than expected losses on such loans or other assets, which would harm our reputation and erode the trust we have built with our Partners and asset investors. Any of these factors could adversely affect our business, financial condition and results of operations. We may also have difficulty with securing the adequate participation of asset investors for Financing Vehicles investing in any such new financial products and services by our Partners, and if we are unable to do so, our ability to develop and grow these new offerings and services will be impaired. If we are unable to effectively manage the foregoing risks, our growth prospects, business, financial condition and results of operations could be adversely affected. For example, in real estate investments, the Table of Contents 17
yields available from properties depend on the amount of revenue generated and expenses incurred. If certain properties or assets do not generate sufficient revenues to meet their acquisition and operating expenses, a Financing Vehicle’s cash flow and ability to pay distributions to its asset investors will be adversely affected. Further, if we do not successfully manage the regulatory, business and market risks associated with our expansion into new markets and new products and effectively execute our growth strategy in these new lines of business, our growth prospects, business, financial condition and results of operations could be adversely affected. We continue to build and refine our AI technology to appropriately manage our point-of-sale business, and if our AI technology does not perform as well in the point-of- sale market as it has in our existing business and we are unable to manage the related risks and effectively execute our growth strategy, our growth prospects, business, financial condition and results of operations could be adversely affected. We are continuing to invest in developing AI technology to support the origination of new financial products by our Partners and service offerings, such as point-of-sale loans and the acquisition of such financial products by Financing Vehicles. New initiatives are inherently risky, as each involves unproven business strategies, addressing and complying with new regulatory requirements, industry expertise and new financial products and services with which we, and in some cases our Partners, have limited or no prior development or operating experience. The industry in which we operate is highly competitive, and if we fail to compete effectively, we could experience price reductions, reduced margins or loss of revenues. We operate in a highly competitive and dynamic industry. Our AI technology faces competition from a variety of players, including those that enable transactions and commerce via digital payments. Our primary competition consists of: other sources of consumer credit, including banks, non-bank lenders and other fintech networks, private equity firms, publicly traded financial technology companies, as well as a variety of technology companies that seek to help financial services providers with the digital transformation of their businesses and various “second-look” financing providers that offer lenders revenue when they approve applications that had otherwise been turned down. We expect competition to intensify in the future, both as emerging technologies continue to enter the marketplace and as large financial incumbents increasingly seek to innovate the services that they offer to compete with our network. Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to more credit products and services and led to the expansion of competition in digital payment options that diminished the need for regular consumer credit such as pay-over-time solutions. Some of our competitors are substantially larger than we are, which gives those competitors advantages we do not have, such as more diversified products, a broader Partner and investor base, the ability to reach more Partners and asset investors, the ability to cross-sell their financial products and cross-subsidize their offerings through their other business lines, operational efficiencies, more versatile technology networks, broad-based local distribution capabilities and lower-cost funding. In addition, because many of our competitors are large financial institutions that fund themselves through low-cost insured deposits and originate and own the assets they produce, they have certain revenue and funding opportunities unavailable to us. Our competitors may also have longer operating histories, more extensive and broader consumer and merchant relationships, and greater brand recognition and brand loyalty than we have. For example, more established companies that possess large, existing Partner and investor bases, substantial financial resources, larger marketing teams and established distribution channels could enter the market. Increased competition could require us to alter the pricing and terms we offer to our Partners. If we are unable to successfully compete, the demand for our AI technology and products could stagnate or substantially decline, and we could fail to retain or grow the number of Partners using our network or the volume of loans or financial products originated by our Partners using our AI technology, which would reduce the attractiveness of our network to Partners, and which would materially and adversely affect our business, results of operations, financial condition and future prospects. A significant portion of our current revenues are derived from Financing Vehicles that acquire consumer credit assets and related financial products, and as a result, we are particularly susceptible to fluctuations in consumer credit activity and the capital markets. Currently, the majority of our Partners’ asset originations facilitated with the assistance of our AI technology are unsecured personal loans, auto loans and point-of-sale in the U.S. market. The market for unsecured personal loans has grown rapidly in recent years, and it is unclear to what extent such a market will continue to grow, if at all. A wide variety of factors could impact the market for unsecured personal loans, including macroeconomic conditions such as rising interest rates, rising inflation and changes in monetary policy, competition, regulatory developments and changes in consumer credit activity. For example, FICO has recently changed its methodology in calculating credit scores in a manner that potentially penalizes borrowers who take out personal loans to pay off or consolidate credit card debt. This change could negatively affect the overall demand for unsecured personal loans. The personal lending market has also benefited from historically low interest rates, as our Partners’ customers are attracted to relatively low borrowing costs. Table of Contents 18
The market for auto loans is sensitive to employment rates, prevailing interest rates and other domestic economic conditions, and it is unclear how rising interest rates or a recession may impact the growth of this market. Delinquencies, repossessions and losses generally increase during economic slowdowns or recessions. Because of our focus on sub-prime customers, the actual rates of delinquencies, repossessions and losses on our automobile contracts could be higher under adverse economic conditions than those experienced in the automobile finance industry as a whole. Furthermore, we may see a reduction in our overall recovery rates due to the volatility of wholesale auction prices leading to higher levels of losses. The point-of-sale market is highly sensitive to macroeconomic headwinds, such as rising inflation and interest rates, which can reduce discretionary consumer spending and decrease the average transaction value of assets. furthermore, any new consumer protection laws or change in how point-of-sale loans are regulated could increase compliance costs for our Partners or limit the availability of these products. If consumer demand for point-of-sale financing shifts towards traditional credit cards or other alternative payment methods, of if a recession leads to a contraction in retail activity, the transaction volumes and related revenues would be materially diminished. Our success will depend, in part, on the continued growth of the unsecured personal loan market and auto loan market and point- of-sale market in the U.S., and if these markets do not further grow, or grows more slowly than we expect, our business, financial condition and results of operations could be adversely affected. In addition, our Partners may, in the future, seek partnerships with competitors that are able to help them offer them a broader array of credit products, such as secured loans. Over time, in order to preserve and expand our relationships with our existing Partners, and enter into relationships with new Partners, it may become increasingly important for us to expand our offerings and be able to help our Partners offer a wider variety of products and services. We also may be susceptible to competitors that choose to offer higher yields to asset investors or offer to pay higher prices for loans or other assets acquired from our Partners. Competitors may elect to provide these incentives, even if they expect such pricing practices to lead to losses for them. Such practices by competitors could negatively affect the overall demand for personal loans facilitated with the assistance of our AI technology and, therefore, our business, financial condition and results of operations. Further, the personal loans that are acquired from our Partners into Financing Vehicles are, for the most part, unsecured, and there is a risk that our Partners’ customers will not prioritize repayment of such loans, particularly in an economic downcycle. For example, if our Partners’ customers incur secured debt, such as a mortgage, a home equity line of credit or an auto loan, our Partners’ customers may choose to repay their obligations under such secured debt before repaying their unsecured loans, which could lead to higher default rates by our Partners’ customers with respect to their unsecured debt. This in turn could lead to losses for Financing Vehicles, which could lead to less demand from asset investors. If this leads to decreased demand by asset investors to participate in Financing Vehicles that acquire assets and other financial products facilitated with the assistance of our AI technology, our business, financial condition and results of operations could be adversely affected. If our estimates, judgments or assumptions relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected. The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of certain assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements and accompanying notes include those related to the valuation of certain financial instruments and allowance for credit losses. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of industry or financial analysts, which may result in a decline in the trading price of Class A Ordinary Shares. Additionally, we regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to us. As a result of new standards, or changes and challenges to existing standards or their interpretation, we might be required to change our accounting policies, alter our operational policies or implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or we may be required to restate our published financial statements. Such changes or challenges to existing standards or in their interpretation may have an adverse effect on our reputation, business, financial condition, and profit and loss, or cause an adverse deviation from our revenue and operating profit and loss target, which may negatively impact our results of operations. Table of Contents 19
Our reputation and brand are important to our success. If we are unable to continue developing our reputation and brand, or if our brand or reputation is compromised, our ability to retain existing and attract new Partners and asset investors and our ability to maintain and improve our relationship with regulators of our industry could be adversely affected. As a result, our business, financial condition and results of operations may suffer. We believe maintaining a strong brand and trustworthy reputation is critical to our success and our ability to retain and attract Partners and asset investors. Factors that affect our brand and reputation include, among other things: perceptions of AI, our industry and our Company, including the quality and reliability of our AI technology, the accuracy of our AI technology, perceptions regarding the application of AI to consumer lending or other markets specifically, the funding component of our business, privacy and security practices, litigation, regulatory activity, and the overall user experience of our Partners and their customers. Negative publicity, negative reviews or negative public perception of these factors, even if inaccurate, could adversely affect our brand and reputation. Certain of the Partners’ arrangements have been criticized in government and media reports as “rent-a-charter” or “rent-a-bank” which has drawn the heightened attention of consumer advocacy groups, government officials and elected representatives. As a result, bank regulators have taken actions causing banks to exit third-party programs that the regulators determined involved unsafe and unsound practices. Further, Federal and State regulators have continued to monitor, investigate, and implement both revised and new regulations for consumer credit products. While these regulators have primarily focused their attention on payday and “short-term, small-dollar” loans, they have looked more broadly to the use of AI technology in the origination of other consumer credit products including, but not limited to, potential claims regarding financial inclusion. Payday and “short-term, small dollar” loans are different from assets facilitated with the assistance of our AI technology, in our view. However, if we are nevertheless associated because of the heightened attention with such payday or short-term, small-dollar consumer loans, or if we are associated with increased criticism of non-payday loan programs involving relationships between bank originators and non-bank lending networks and program managers, or if regulatory scrutiny increases on the use of AI in our Partner’s origination practices, demand for loans or other assets could significantly decrease, which could cause our Partners to reduce their origination volumes or terminate their arrangements with us, impede our ability to attract new Partners or delay the onboarding of Partners, impede our ability to attract asset investors to participate in the funding component of our network or reduce the number of potential Partners that use our network. Any of the foregoing could adversely affect our results of operations and financial condition. We may also become subject to lawsuits, including class action lawsuits, or other challenges such as government investigations, inquiries, enforcement, or arbitration, against our Partners or us for obligations from our Partners through our AI technology. If there are changes in laws or in the interpretation or enforcement of existing laws affecting loans or other assets we place with the assistance of our AI technology, or if we become subject to such lawsuits, investigations or inquiries, our business, financial condition and results of operations would be adversely affected. Harm to our reputation can also arise from many other sources, including employee and independent contractor or former employee and independent contractor misconduct, misconduct or negligence by outsourced service providers or other counterparties, failure by us or our Partners to meet minimum standards of service and quality, and inadequate protection of borrower information and compliance failures and claims. If we are unable to protect our reputation and brand, our business, financial condition and results of operations would be adversely affected. If we are unable to manage the risks associated with fraudulent activity, our brand and reputation, business, financial condition, and results of operations could be adversely affected and we could face material legal, regulatory and financial exposure (including fines and other penalties). Fraud is prevalent in the financial services industry and is likely to increase as perpetrators become more sophisticated. We are subject to the risk of fraudulent activity associated with our Partners’ customers and third parties handling our Partners’ borrower information and, in limited situations, cover certain fraud losses of Partners and asset investors. Fraud rates could also increase in a down-cycle economy. While we perform initial and ongoing due diligence on our Partners’ fraud prevention and detection policies and procedures, we rely on our Partners to predict and otherwise validate or authenticate applicant-reported data and data derived from third-party sources and notify us if any fraud is detected. If such efforts are insufficient to accurately detect and prevent fraud, the level of fraud-related losses of products could increase, which would decrease confidence in our AI technology. There have been some instances of fraud by Partners’ customers in the past which have generally occurred at the origination of the asset in the normal course of business and are not material to us. If any such fraud is identified, the applicable Partner is typically required to repurchase the related asset. A failure to accurately detect and prevent fraud may also lead to increased costs if we have to invest in developing new technology to defend against fraud, which, in turn may lead to decreased returns in Financing Vehicles and therefore decreased Table of Contents 20
returns for asset investors. In addition, our Partners and asset investors may not be able to recover amounts disbursed on products made in connection with inaccurate statements, omissions of fact or fraud, which could erode the trust in our brand and negatively impact our ability to attract new Partners and asset investors. High profile fraudulent activity within the financial services industry also could negatively impact our brand and reputation. In addition, significant increases in fraudulent activity could lead to regulatory intervention, which could increase our costs and also negatively impact our brand and reputation. Further, if there is any increase in fraudulent activity that increases the need for human intervention in screening application data, the level of automation on our network could decline and negatively affect our unit economics. If we are unable to manage these risks, our business, financial condition and results of operations could be adversely affected. We are subject to risks related to our dependency on our Founders, key personnel, employees and independent contractors, including highly-skilled technical experts, as well as attracting, retaining and developing human capital in a highly competitive market. Our success and future growth depend upon the continued services of our management team and other key employees and independent contractors, including highly-skilled technical experts. In particular, the Founders, who are members of our leadership team, are critical to our overall management, as well as the continued development of our products and services, our culture and our strategic direction. From time to time, there may be changes in our management team resulting from the hiring or departure of executives, key employees and independent contractors, which could disrupt our business. The loss of one or more members of our senior management or key employees or independent contractors could harm our business, and we may not be able to find adequate replacements. We may not be able to retain the services of any members of our senior management, key employees or independent contractors, including high-skilled technical experts. From time to time, we rely on temporary independent contractor programs to scale our operations team. Failure to effectively implement and manage such programs could result in misclassification or other employment related claims or inquiries by governmental agencies. In addition, to execute our growth plan, we must attract and retain highly qualified personnel, including engineering and data analytics personnel. Competition for highly skilled technical experts, including engineering and data analytics personnel, is extremely intense, particularly in Israel where we have large operations. From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees and independent contractors with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, prospective and existing employees and independent contractors often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, experiences significant volatility or increases such that prospective employees or independent contractors believe there is limited or less upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees and independent contractors. In addition, our recent reduction in workforce, and any future reductions in workforce or other restructuring intended to improve operational efficiencies and operating costs, may adversely affect our ability to attract and retain employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed. We generally enter into non- competition agreements with our employees and independent contractors. These agreements prohibit our employees and independent contractors, if they cease working for us, from competing directly with us or working for our competitors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees and independent contractors work, and it may be difficult for us to restrict our competitors from benefiting from the expertise our former employees and independent contractors developed while working for us. The funding component of our business related to the Financing Vehicles is highly competitive. The funding component of our business is highly competitive, with competition based on a variety of factors, including macroeconomic conditions, investment performance, the quality of assets provided to asset investors, investor liquidity and willingness to invest, vehicle terms (including fees), brand recognition and business reputation. The funding component of our business competes with a number of other specialized investment funds, hedge funds, funds of hedge funds, other managing pools of capital, securitizations by our Partners or other consumer credit originators, as well as corporate buyers, traditional asset managers, commercial banks, investment banks and other financial institutions (including sovereign wealth funds), and we expect that funding sources may be limited as competition will continue to increase. For example, certain traditional asset managers have developed their own lending networks and are marketing other lending and credit strategies as alternatives to fund investments. Additionally, developments in financial technology, or fintech, such as distributed ledger technology, or blockchain, have the potential to disrupt the financial industry and change the way consumer lenders and other financial institutions do business. A number of factors serve to increase our competitive risks: • a number of our competitors in some of our businesses have greater financial, technical, marketing and other resources and more personnel than we do; Table of Contents 21
• some Financing Vehicles may not perform as well as competitors’ Financing Vehicles or other available investment products; • several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain investments, including in certain industries or businesses, than we can and/or bear less compliance expense than we do; • some of our competitors may have more flexibility than us in raising certain types of Financing Vehicles under the contracts or terms they have negotiated with their investors; and • some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make. We have historically competed primarily on the basis of the performance of Financing Vehicles, and not on the level of our fees or incentive fees relative to those of our competitors. However, there is a risk that fees and incentive fees in the alternative investment or securitization industry will decline, without regard to our historical performance. Fee or incentive fee income reductions on existing or future Financing Vehicles, without corresponding decreases in our cost structure, would adversely affect our business and revenues. Maintaining our reputation is critical to attracting and retaining asset investors and for maintaining our relationships with our regulators. Negative publicity regarding us, our personnel or our Partners could give rise to reputational risk that could significantly harm our existing business and business prospects. Similarly, events could occur that damage the reputation of our industry generally, such as the insolvency or bankruptcy of large funds or lending networks or a significant number of funds or lending networks or highly publicized incidents of fraud or other scandals, any one of which could have a material adverse effect on our business, regardless of whether any of those events directly relate to the Financing Vehicles or the investments made by Financing Vehicles. In addition, the attractiveness of Financing Vehicles relative to investments in other investment products could decrease depending on economic conditions. Furthermore, any new or incremental regulatory measures for the U.S. financial services and lending industries may increase costs and create regulatory uncertainty and additional competition for many Financing Vehicles. See “—As the political and regulatory framework for AI technology and machine learning evolves, our business, financial condition and results of operations may be adversely affected.” This competitive pressure could adversely affect our ability to make successful investments and limit our ability to raise future Financing Vehicles, either of which would adversely impact our business and revenues. Our failure to deal appropriately with conflicts of interest in the funding component of our business, related to our allocation of investment opportunities between Financing Vehicles, could damage our reputation and adversely affect our businesses. Conflicts of interest may also arise in our allocation of costs and expenses, and we are subject to increased regulatory scrutiny and uncertainty with regard to those determinations. As we have expanded and as we continue to expand the number and scope of our businesses, we increasingly confront potential conflicts of interest relating to the investment activities of the Financing Vehicles. Conflicts of interest continue to be a significant area of focus for regulators, investors and the media. Because of the variety of businesses and investment strategies that we pursue, we may face a higher degree of scrutiny compared with others that focus on fewer asset classes. We place assets across Financing Vehicles. In addition, certain Financing Vehicles may purchase an interest in one or more other Financing Vehicles. However, the risk that asset investors or regulators could challenge allocation decisions as inconsistent with our obligations under applicable law, governing agreements or our own policies cannot be eliminated. Further, the perception of non- compliance with such requirements or policies could harm our reputation with asset investors. A failure to appropriately deal with these, among other, potential conflicts, could negatively impact our reputation and ability to raise additional Financing Vehicles or result in potential litigation or regulatory action against us. The investment activities or strategies used for certain Financing Vehicles may conflict with the transactions and strategies employed on behalf of other Financing Vehicles, and may affect the prices and availability of investments in which a Financing Vehicle may invest. Subject to any legal and regulatory obligations, the investment activities of our affiliates or a Financing Vehicle are carried out generally without reference to positions held by another Financing Vehicle and may have an effect on the value of the positions so held, or may result in an affiliate having an interest in an issuer adverse to that of a Financing Vehicle. Because the Financing Vehicles operate different businesses, the affiliates are subject to a number of potential and actual conflicts of interest, potentially greater regulatory oversight, and more legal and contractual restrictions than would be the case if the affiliates had only a single line of business. Table of Contents 22
In particular, Financing Vehicles may invest in the same types of assets in which the other Financing Vehicles currently invest and expect to continue to invest in the future. Although we anticipate that the Financing Vehicles will operate within a limited and defined set of parameters (e.g., time, scope and duration) when acquiring any such assets, a Financing Vehicle could encounter actual and potential conflicts to the extent that any such Financing Vehicle competes with others for investment opportunities or our resources (e.g., personnel). These activities can adversely affect the prices and availability of loans or other assets held by or potentially considered for purchase for the account of a Financing Vehicle. Subject to the requirements of each Financing Vehicle’s governing documents, investment opportunities sourced by affiliates or Financing Vehicles will generally be placed among the accounts of the applicable Financing Vehicles in a manner that the applicable manager or sponsor believes to be appropriate given the factors that it believes to be relevant, such as each Financing Vehicle’s respective investment objectives, concentration limits, interest and asset coverage tests, collateral quality, liquidity and requirements tests, lender covenants, the amount of free cash each of them has available for investment, total capital and capital commitments, anticipated future cash flows and cash requirements, and other considerations and limitations of such Financing Vehicle. We regularly make determinations to allocate costs and expenses both among Financing Vehicles and between such vehicles and their respective governing entities. Certain of those determinations are inherently subjective and virtually all of them are subject to regulatory oversight. Any determination or allegation of, or investigation into, a potential violation could cause reputational harm and a loss of investor confidence in our business. It could also result in regulatory lapses and applicable penalties, as well as increased regulatory oversight of our business. In addition, any determination to allocate fees to the applicable investment adviser or manager could negatively affect our net income, and ultimately decrease the value of our Class A Ordinary Shares and our dividends to our shareholders. We have historically, and may in the future need to raise additional funds, including, but not limited to, through equity, debt, secured borrowings, or convertible debt financings to support business growth, and those funds may be unavailable on acceptable terms, or at all. As a result, we may be unable to meet our future capital requirements, which could limit our ability to grow and jeopardize our ability to continue our business. We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new products and services, invest in loans and securities, including risk retention investments, enhance our AI technology, scale and improve our operating infrastructure, or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity, debt, secured borrowings, including repurchase agreements, or convertible debt financings to secure additional funds. As of the date of this Annual Report on Form 10-K, we had outstanding $160 million of 6.125% exchangeable senior notes due in October 2029 (the “2029 Notes”). Upon exchange of the 2029 Notes, we have the option to pay or deliver, as the case may be, cash, our Class A Ordinary Shares or a combination thereof. If we raise additional funds by issuing equity securities or securities convertible into equity securities, our shareholders may experience dilution. Debt financing, such as secured or unsecured borrowings, including repurchase agreements, credit facilities or corporate bonds, may involve covenants restricting our operations or our ability to incur additional debt. Debt financing may also require “negative pledge” or security arrangements including, but not limited to, cash collateral agreements that restrict the availability of cash held as collateral which is the case for amounts we may borrow in the future under our existing credit agreement and other facilities. In addition, future equity financing or replacement or refinancing of any debt financings or secured borrowings, including repurchase agreements, may not be available on terms favorable to us or our shareholders, or at all. In addition, if the overall economy is negatively impacted for an extended period, our results of operations, financial position and cash flows may be materially adversely affected. A severe prolonged economic downturn could result in a variety of risks to the business, including weakening our ability to develop potential businesses and a decreased ability to raise additional capital when needed on acceptable terms, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, we may be unable to pursue certain business opportunities and our ability to continue to support our business growth and to respond to business challenges could be impaired and our business may be harmed. In addition, we may be unable to access capital to fund the purchases of additional products or other assets through raising new and successor Financing Vehicles. For additional information, see “—Our ability to raise capital from asset investors is a vital component of the products we offer to Partners. If we are unable to raise capital from asset investors at competitive rates, or at all, it would materially reduce our revenue and cash flow and adversely affect our financial condition.” Any legal proceedings, investigations or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome. In addition, our business and operations could be negatively affected if they become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our share price. Table of Contents 23
We are and may in the future become subject to legal proceedings, investigations and claims, including claims that arise in the ordinary course of business, such as claims brought by asset investors or Partners in connection with commercial disputes, claims by users, claims or investigations brought by regulators or employment claims made by our current or former employees and independent contractors. We are subject to claims in the ordinary course of business, including employment claims. We are not currently a party to any pending or, to our knowledge, threatened litigation that will have a significant effect on our financial position or profitability. Any litigation, investigation or claim, whether meritorious or not, could harm our reputation, will increase our costs and may divert management’s attention, time and resources, which may in turn harm our business, financial condition and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims and might not continue to be available on terms acceptable to us. A claim brought against us for which we are uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial position and results of operations. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Shareholder activism, which could take many forms or arise in a variety of situations, as well as the frequency of lawsuits against special purpose acquisition company (“SPAC”) sponsors, has increased in recent years. Volatility in the share price of the Class A Ordinary Shares or other reasons may in the future cause it to become the target of securities litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests, could result in substantial costs and divert management’s and the Pagaya Board’s attention and resources from our business. Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to our future, adversely affect its relationships with Partners, investors or service providers and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation and activist shareholder matters. Further, our share price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and shareholder activism. Although we currently maintain insurance coverage, such coverage may not be sufficient to cover the types or extent of claims or loss that may be incurred or received. We currently maintain insurance in connection with our business, including, among other coverages, directors and officers liability insurance, errors and omissions/professional liability insurance, employment practices liability insurance, fiduciary liability insurance, and cyber insurance. The scope and limits of such insurance may not be sufficient to cover the types or extent of claims or loss that may be incurred or received. In addition, there may be risks for which we do not maintain or procure insurance coverage or for which the insurance coverage may not respond. We are growing rapidly, and our insurance coverage may not be sufficient to protect us from any loss now or in the future and we may not be able to successfully claim our losses under our current insurance policies on a timely basis, or at all. Our inability to obtain and maintain appropriate insurance coverage could cause a substantial business disruption, adverse reputational impact, and regulatory scrutiny. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected. Our risk management policies and procedures, and those of our third-party vendors upon which we rely, may not be fully effective in identifying or mitigating risk exposure. If our policies and procedures do not adequately protect us from exposure to these risks, we may incur losses that would adversely affect our financial condition, reputation and market share. We have developed risk management policies and procedures and we continue to refine them as we conduct our business. Many of our procedures involve oversight of third-party vendors that provide us with critical services such as information technology systems and infrastructure, portfolio management, custody, market data expenses and fund accounting and administration and pricing services. Our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our risk exposure. Further, as we expand into new lines of business, our risk management policies and procedures may not be able to adequately keep up with our current rapid rate of expansion, and may not be adequate or sufficient to mitigate risks. Moreover, we are subject to the risks of errors and misconduct by our employees and independent contractors, including fraud and non- compliance with policies. These risks are difficult to detect in advance and deter, and could harm our business, results of operations or financial condition. Although we maintain insurance and use other traditional risk-shifting tools, such as third-party indemnification, to manage certain exposures, they are subject to terms such as deductibles, coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency. If our policies and procedures do not adequately protect us from exposure, and our exposure is not adequately covered by insurance or other risk-shifting tools, we may incur losses that would adversely affect our business, financial condition and results of operations. Table of Contents 24
If there is a pledge of a substantial amount of Pagaya Ordinary Shares, a change of control could occur and could materially and adversely affect our financial condition, results of operation and cash flows. Shareholders that beneficially own a significant interest in Pagaya may pledge a substantial portion of Pagaya Ordinary Shares that they own to secure loans made to them by financial institutions. If a shareholder defaults on any of its obligations under these pledge agreements or the related loan documents, these financial institutions may have the right to sell the pledged shares, subject to the lock-up restrictions set forth in the Pagaya Articles. Such a sale could cause our share price to decline. Many of the occurrences that could result in a foreclosure of the pledged shares are out of our control and are unrelated to our operations. Because these shares may be pledged to secure loans, the occurrence of an event of default could result in a sale of pledged shares that could cause a change of control of Pagaya, even when such a change of control may not be in the best interests of our shareholders, and it could also result in a default under certain material contracts to which we are a party, which could materially and adversely affect our financial condition, results of operations and cash flows. We actively evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. We may not be able to realize the potential benefits of any such future business investments or acquisitions, and we may not be able to successfully integrate acquisition targets, which could hurt our ability to grow our business. We actively evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. Acquisitions or investments involve significant challenges and risks and could impair our ability to grow our business or develop new products or expand into new markets and ultimately could have a negative impact on our financial results. If we pursue a particular transaction, we may limit our ability to enter into other transactions that could help us achieve our other strategic objectives. If we are unable to timely complete acquisitions, we may be unable to pursue other transactions, we may not be able to retain critical talent from the target company, technology may evolve and make the acquisition less attractive, and other changes can take place which could reduce the anticipated benefits of the transaction and negatively impact our business. Regulators could also impose conditions that reduce the ultimate value of our acquisitions. In addition, to the extent that our perceived ability to consummate acquisitions has been harmed, future acquisitions may be more difficult, complex or expensive. We may not successfully integrate acquired companies and we may fail to realize the anticipated benefits of such acquisitions. Furthermore, acquisitions may disrupt our ongoing operations, divert management from their primary responsibilities, subject us to additional liabilities, increase our expenses, subject us to increased regulatory requirements, cause adverse tax consequences or unfavorable accounting treatment, expose us to claims and disputes by shareholders and third parties, and adversely impact our business, financial condition, and results of operations. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges, and our due diligence processes may fail to identify significant issues with the assets or company in which we are investing or are acquiring. We may have to pay cash for any such acquisition which would limit other potential uses for our cash. If we incur debt to fund any such acquisition, such debt may subject us to material restrictions in our ability to conduct our business, result in increased fixed obligations, and subject us to covenants or other restrictions that would decrease our operational flexibility and impede our ability to manage our operations. If we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders’ ownership would be diluted. A disruption or failure in services provided by third parties could materially and adversely affect our business. We increasingly rely on partners and other third parties to provide and/or assist with certain critical aspects of our business, including: (i) customer support, (ii) collections, (iii) loan origination, (iv) data verification and (v) servicing. These partners and third parties may be subject to cybersecurity incidents, privacy breaches, service disruptions and/or financial, legal, regulatory, labor or operational issues; any of which may result in the third party providing inadequate service levels to us or our customers. For example, a significant number of consumers that apply for financial products offered by our partners are sourced through loan aggregators. These loan aggregators may provide offers to consumers from multiple lenders, and the prioritization of these offers seen by the consumer are determined in the sole discretion of the loan aggregator, and offers from our partners may or may not be displayed to consumers or may be displayed less predominantly than competing lenders. Loan aggregators also typically include the ability to terminate their agreements to provide services to our partners for any reason and at any time upon a 30 days’ notice. If a loan aggregator terminated its relationship with one of our partners, the volume of loans or financial products originated by our partners could be significantly diminished, which may in turn negatively affect our ability to purchase assets from our partners. In addition, such loan aggregators also face litigation and regulatory scrutiny for their part in the consumer lending ecosystem, and as a result, their business models may require fundamental change or may not be sustainable in the future. For example, loan aggregators are increasingly required to be licensed as loan brokers or lead generators in many states, subjecting them to increased regulatory supervision and more stringent business requirements. These additional regulatory Table of Contents 25
requirements may impact the ability of loan aggregators to provide their services, or to provide these services on commercially reasonable terms. In addition, these third parties may breach their agreements with us or our partners and/or refuse to continue or renew these agreements on commercially reasonable terms. If any third party provides inadequate service levels or fails to provide services at all, we may face business disruptions, customer dissatisfaction, reputational damage and/or financial and legal exposure; any of which may harm our business. We are exposed to risks relating to our incorporation and location in Israel. The Israeli government is currently pursuing extensive changes to Israel’s judicial system. In response to the foregoing developments, certain leading international financial institutions, including investment banks, investors and key economists, have indicated several causes for concern, including that such proposed changes, if adopted, may cause a downgrade to Israel’s sovereign credit rating and Israel's international standing, which would adversely affect the macroeconomic condition in which we operate, and also potentially deter foreign investment into Israel or Israeli companies, which may hinder our ability to raise additional funds, if deemed necessary by our management and board of directors. We could be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Any such losses could adversely affect our business, financial condition and results of operations. Risks Related to Technology, Intellectual Property and Data Regulators may assert, and courts may conclude, that certain uses of AI technology leads to unintentional bias or discrimination. Regulators, including the FTC and CFPB, have expressed concerns that certain AI technology may lead to unintentional bias or discrimination in an automated credit analysis process and have increased their oversight of automated systems. New and evolving laws, such as the EU AI Act and Colorado AI Act, impose strict requirements on "high-risk" AI systems. Failure to comply with these evolving standards could subject us to legal or regulatory liability, reputational harm, and/or increase our legal and compliance expenses. Pursuant to CFPB Circular 2023-03 and 2025 Supervisory Highlights, we are required to provide specific, actionable reasons for credit denials. The complexity of our AI models may make it difficult to provide these reasons with the granularity required by regulators, leading to potential violations of Regulation B. The CFPB increasingly treats discriminatory algorithmic outcomes as an Unfair, Deceptive, or Abusive Act or Practice (“UDAAP”). In 2025, the Bureau identified disparities in credit card and auto-lending models where "less discriminatory alternatives" were available, suggesting that maintaining a biased model when a more neutral one exists is a per se violation. The FTC has successfully sought "algorithmic disgorgement" in enforcement actions, requiring companies to destroy models and data weights derived from biased or improperly collected information. Such a remedy applied to us would result in the loss of proprietary intellectual property and significant operational disruption. The Equal Credit Opportunity Act and the Fair Credit Reporting Act require creditors to provide consumers with the reasons for denial of credit or other adverse action, and providing such reasons can be more difficult given the complexity of certain AI technology. In addition, the Federal Trade Commission (“FTC”) has brought enforcement actions related to the use of AI and automated credit analysis in circumstances where the FTC has determined that the use of such tools is insufficiently transparent to consumers. Our inability to enable our Partners and their customers to comply with the requirements of existing laws or new interpretations of existing laws, or new regulatory rulemaking that restricts the use of AI technology in consumer credit underwriting or other markets, could adversely affect our business, financial condition, and results of operations. We may also be obligated to indemnify Partners or pay substantial settlement costs in connection with any such claim or litigation related to the use of our AI technology and automated credit analysis, which could be costly. Even if we were to prevail in such a dispute, any litigation regarding our AI technology could be costly and time consuming and divert the attention of our management and key personnel from our business operations. The CFPB has, at times, taken expansive views of its authority to regulate consumer financial services, including non-bank providers of consumer financial products and services, creating uncertainty as to how the agency’s actions or the actions of any other new government agency could adversely affect our business, financial condition and results of operations. Table of Contents 26
We may be unable to sufficiently, and it may be difficult and costly to, obtain, maintain, protect, or enforce our intellectual property and other proprietary rights. Our ability to operate our businesses depends, in part, upon our proprietary technology. We may be unable to protect our proprietary technology effectively, which would allow competitors to duplicate our AI technology and adversely affect our ability to compete with them. We rely on a limited combination of trade secret, trademark laws and other rights, as well as confidentiality procedures, contractual provisions and our information security infrastructure to protect our proprietary technology, processes and other intellectual property. The steps we take to protect our intellectual property rights may be inadequate. For example, a third party may attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent. The pursuit of a claim against a third party for infringement of our intellectual property could be costly, and any such efforts may not be successful. Our failure to secure, protect and enforce our intellectual property rights could adversely affect our brand and adversely impact our business. Our proprietary technology, including our AI technology, may be alleged to infringe upon third-party intellectual property, and we may face intellectual property challenges from such other parties. We may not be successful in defending against any such challenges or in obtaining licenses to avoid or resolve any intellectual property disputes. If we are unsuccessful, such claim or litigation could result in a requirement that we pay significant damages or licensing fees, or we could in some circumstances be required to make changes to our business to avoid such infringement, which would negatively impact our financial performance. We may also be obligated to indemnify parties or pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to modify applications or refund fees, which could be costly. Even if we were to prevail in such a dispute, any litigation regarding our intellectual property could be costly and time consuming and divert the attention of our management and key personnel from our business operations. Moreover, it has become common in recent years for individuals and groups to purchase intellectual property assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies such as ours. Even in instances where we believe that claims and allegations of intellectual property infringement against us are without merit, defending against such claims is time consuming and expensive and could result in the diversion of time and attention of our management, employees and independent contractors. In addition, although in some cases a third party may have agreed to indemnify us for such costs; such indemnifying party may refuse or be unable to uphold its contractual obligations. In other cases, our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant. Furthermore, our technology may become obsolete or inadequate, and we may not be able to successfully develop, obtain or use new technologies to adapt our models and systems to compete with other technologies as they develop. If we cannot protect our proprietary technology from intellectual property challenges, or if our technology becomes obsolete or inadequate, our ability to maintain our model and systems or facilitate products could be adversely affected. Our technology relies in part on third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to utilize our technology and increase our costs. Our AI technology, including our computational infrastructure, relies on software licensed to us by third-party authors under “open-source” licenses. Some open-source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open-source software we use. If we combine our proprietary software with open-source software in a certain manner, we could, under certain open-source licenses, be required to release the source code of our proprietary software to the public. In addition, our ability to protect our proprietary intellectual property may, due to our reliance on open-source software, be limited. This would allow our competitors to create similar solutions with less development effort and time and ultimately put us at a competitive disadvantage. Although we monitor our use of open-source software to avoid subjecting our products to conditions we do not intend, the terms of many open-source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our services. Moreover, our processes for controlling our use of open-source software may not be effective. If we are held to have breached the terms of an open-source software license, we could be required to seek licenses from third parties to continue operating our network on terms that are not economically favorable or feasible, to re- engineer our network or the supporting computational infrastructure to discontinue use of certain code, or to make generally available, in source code form, portions of our proprietary code. Further, in addition to risks related to license requirements, use of certain open-source software carries greater technical and legal risks than does the use of third-party commercial software. For example, open-source software is generally provided as-is without any support or warranties or other contractual protections regarding infringement or the quality of the code, including the Table of Contents 27
existence of security vulnerabilities. To the extent that our network depends upon the successful operation of open-source software, any undetected errors or defects in open-source software that we use could prevent the deployment or impair the functionality of our systems and harm our reputation. In addition, the public availability of such software may make it easier for attackers to target and compromise our network through cyberattacks. Any of the foregoing risks could materially and adversely affect our business, financial condition and results of operations. Our proprietary AI technology relies in part on the use of our Partners’ borrower data and third-party data, and if we lose the ability to use such data, or if such data contains gaps or inaccuracies, our business could be adversely affected. We rely on our proprietary AI technology, which includes statistical models built using a variety of datasets. Our AI technology relies on a wide variety of data sources, including data collected from our Partners’ customers and applicants, credit bureau data and our credit experience gained through monitoring the payment performance of our Partners’ customers over time. If we are unable to access and use data collected from our Partners’ customers and applicants, data received from credit bureaus, repayment data collected as part of the funding component of our network, or other third-party data used in our AI technology, or our access to such data is limited, our ability to accurately evaluate our Partners’ potential customers, detect fraud and verify applicant data would be compromised. Any of the foregoing could negatively impact the accuracy and effectiveness of our AI technology and the volume of products facilitated with the assistance of our network. Third-party data sources on which we rely include the consumer reporting agencies regulated by the CFPB and other data sources. Such data is electronically obtained from third parties and used in our AI technology to process our Partners’ applicants. Data from national credit bureaus and other consumer reporting agencies and other information that we receive from third parties about a Partner’s applicant or borrower, may be inaccurate or may not accurately reflect the applicant’s or borrower’s creditworthiness for a variety of reasons, including inaccurate reporting by creditors to the credit bureaus, errors, staleness or incompleteness. In addition, if third-party data used to improve our AI technology or train the AI model is inaccurate, or access to such third-party data is limited or becomes unavailable to us, the efficacy of our AI technology and our ability to continue to improve our AI technology would be adversely affected. Any of the foregoing could, for our Partners, result in sub-optimally and inefficiently evaluated assets, incorrect evaluation of transactions, or higher than expected losses, which in turn could adversely affect our ability to attract new asset investors and Partners or increase our Partners’ volume of financial products and adversely affect our business, financial condition and results of operations. Cyberattacks, security breaches or similar compromise of our information technology systems, or those of third parties upon which we rely, or our data could adversely impact our brand and reputation and our business, operating results and financial condition. We are dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, process, transmit. store and otherwise process large amounts of sensitive information, including personal information, credit information and other sensitive data of our Partners’ customers and other consumers providing their data to a Partner, and, as a result, we and the third parties upon which we rely face a variety of evolving threats that could cause security incidents. We also have arrangements in place with certain of our third-party vendors that require us to share consumer information. We rely on third parties to assist in our operations, and as a result, we manage a number of third-party vendors that may have access to our computer networks and sensitive or confidential information. In addition, many of those third parties turn to subcontractors or rely on their own service providers in outsourcing some of their responsibilities. As a result, our information technology systems, including the functions of third parties that are involved or have access to those systems, are large and complex, with many points of entry and access. Our ability to monitor third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award. While all information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacks and exposures, the size, complexity, accessibility and distributed nature of our information technology systems, and the large amounts of sensitive information stored on those systems make such systems potentially vulnerable to unintentional or malicious, internal and external attacks. Vulnerabilities may be exploited from inadvertent or intentional actions of our employees, independent contractors, third-party service providers, Partners, asset investors or by malicious third parties that may result in actual or attempted unauthorized access, mishandling or misuse of information, computer viruses or malware, cyberattacks that could lead to unauthorized persons obtaining confidential information, destruction of data, disruption or deterioration of service, sabotaged or damaged systems, as well as distributed denial of service attacks, data breaches and other infiltration, exfiltration or other similar events. Additional cybersecurity threats include, but are not limited to, credential Table of Contents 28
harvesting, account takeovers, server malfunctions, software or hardware failures, software errors, adware, attacks enhanced or facilitated by AI, natural disasters, terrorism, war and telecommunication and electrical failures and other similar threats. Cyberattacks are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise, including organized criminal groups, “hacktivists,” nation states and others. In addition to the extraction of sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of- service attacks, credential stuffings, social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), supply chain attacks and other means to affect service reliability and threaten the confidentiality, integrity and availability of information and systems. In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our products or services, loss of sensitive information and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Further, an increase in employees working remotely could increase the risk of a security breach as more of our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit and in public locations. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective. Significant disruptions of our, our Partners’ and third-party service providers’ and/or other business partners’ information technology systems or other similar data security incidents could adversely affect our business operations and result in the loss, misappropriation, or unauthorized access, use or disclosure of, or the prevention of access to, sensitive information, which could result in financial, legal, regulatory, business and reputational harm to us. We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely). We may not, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we may experience delays in deploying remedial measures and patches designed to address identified vulnerabilities. Vulnerabilities could be exploited and result in a security incident. We may expend significant resources or modify our business activities to try to protect against security incidents, but our systems, policies and procedures may not be able to adequately keep up with our rapid expansion and may not be adequate or sufficient to mitigate risks. Certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive information. In addition, many governments have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity following a breach, which may cause our Partners’ customers and potential customers to lose confidence in the effectiveness of our data security measures related to our AI technology and business. Any security breach, whether actual or perceived, would harm our reputation and ability to attract new Partners and asset investors. If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant consequences may prevent or cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. Table of Contents 29
Any sensitive information (including confidential, competitive, proprietary, or personal data) that we may input now or in the future into a third-party generative AI/ML platform could be leaked or disclosed to others, including if sensitive information is used to train the third parties’ AI/ML model. Additionally, where an AI/ML model ingests personal data and makes connections using such data, those technologies may reveal other personal or sensitive information generated by the model. Additionally, sensitive data of the Company or our customers could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies. Our Financing Vehicles rely on third-party service providers for a substantial portion of our business activities, and any disruption of service experienced by such third-party service providers or our failure to manage and maintain existing relationships or identify other high-quality, third-party service providers could harm our reputation, business, results of operations and growth prospects. Our Financing Vehicles rely on a variety of third-party service providers in connection with a substantial portion of the operation of our business and the business of Financing Vehicles. Any performance issues, errors, bugs or defects in third-party software or services could result in errors, defects or a failure of our solutions, which could materially and adversely affect our reputation, business, financial condition and results of operations. Many of our third-party service providers attempt to impose limitations on their liability for such performance issues, errors, bugs or defects, and if enforceable, we may have additional liability to our Partners, asset investors or to other third parties that could harm our reputation and increase our operating costs. Additionally, in the future, we might need to license other software or services to enhance our solutions and meet evolving Partner and asset investor demands and requirements, which may be unavailable to us on commercially reasonable terms or not at all. Any limitations on our ability to use or obtain third-party software or services could significantly increase our expenses and otherwise result in delays, a reduction in functionality or errors or failures of our solutions until equivalent technology or content is either developed by us or, if available, identified, obtained through purchase or licensed and integrated into our solutions, which could adversely affect our business. In addition, third-party software and services may expose us to increased risks, including risks associated with the integration of new technology, the diversion of resources from the development of our own proprietary technology and our inability to generate revenue from new technology sufficient to offset associated acquisition and maintenance costs, all of which may increase our expenses and materially and adversely affect our business, financial condition and results of operations. We will need to maintain our relationships with third-party service providers and obtain software and services from such providers that do not contain any material errors or defects. Any failure to do so could adversely affect our ability to deliver effective solutions to Partners and asset investors and adversely affect our business. Under applicable employment laws, we may not be able to enforce covenants not to compete. We generally enter into non-competition agreements as part of our employment agreements with our employees. These agreements generally prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors, Partners or asset investors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefiting from the expertise our former employees or consultants developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the protection of a company’s trade secrets or other proprietary know how. Risks Related to our Single Family Rental (“SFR”) Operations The SFR market is highly competitive, and we may be unable to compete successfully against our existing and future competitors. The SFR market is competitive and fragmented, and we expect competition to continue to increase. The success of our SFR operations depend on our ability to continue to attract customers to our platform, and to enhance their engagement in a cost effective manner. Accordingly, our success depends on our ability to continuously innovate and improve our platforms and services to provide value to our investors, our real estate customers, and their tenants, which can be costly and burdensome. However, there can be no guarantee that in the future we can continue to launch new products and services in a timely manner, or at all, or that the new products or services launched by us will be utilized by our real estate customers and tenants at the rate we expect, or at all. We face competition on a national level and in each of our markets from traditional real estate management firms and traditional real estate agents, some of which operate nationally and others that are limited to a specific region or regions. We also face competition from real estate technology companies, including a growing number of internet based brokerages and others who operate with a variety of business models. New entrants, particularly smaller companies offering point solutions, continue to join our market categories. However, our existing and potential competitors include real estate technology companies and real estate brokerage firms and management Table of Contents 30
companies that operate, or could develop, national and/or local businesses offering similar services, including real estate brokerage and management services, to home buyers or sellers or institutional owners. Several of these real estate companies which may enter our market categories could have significant competitive advantages, including better name recognition, greater resources, lower cost of funds and additional access to capital, and more types of offerings than we currently do. These companies may also have higher risk tolerances or different risk assessments than we do. In addition, these competitors could devote greater financial, technical and other resources than we have available to develop, grow or improve their businesses. Pressure from competitors seeking to acquire a greater share of our tenant and customer market share could adversely affect our pricing and margins, lower our revenue and increase our research and development and marketing expenses. If we are unable to compete successfully against our existing or future competitors, our SFR operations could be adversely affected. Furthermore our SFR Partners’ success, and therefore our SFR operations success, depends in large part upon the ability to attract and retain qualified residents for our SFR Partners’ properties. Our customers face competition for residents from other lessors of single-family rental properties, apartment buildings, and condominium units. Potential competitors may have lower rates of occupancy than our customers do or may have superior access to capital and other resources, which may result in competing owners more easily locating residents and leasing available housing at lower rental rates than our customers might offer, which could adversely affect our customers’ ability to obtain quality residents and favorable terms. Additionally, some competing housing options may qualify for government subsidies that may make such options more accessible and therefore more attractive than our customers’ properties. This competition may affect our customers’ ability to attract and retain residents and may reduce the rental rates they are able to charge. The success of our SFR operations depends on general economic conditions, the health of the U.S. real estate industry generally, and risks generally incident to the ownership and leasing of single-family rental real estate, and our SFR operations may be negatively impacted by economic and industry downturns, including seasonal and cyclical trends, and volatility in the single-family rental real estate lease market. Our success is impacted, directly and indirectly, by general economic conditions, the health of the U.S. real estate industry and the markets in which we operate, and risks generally incident to the ownership and leasing of residential real estate, many of which are beyond our control. Our business could be harmed by a number of factors that could impact the conditions of the U.S. real estate industry, as well as the markets that we operate in, including: • a period of slow economic growth or recessionary conditions; • volatility in the residential real estate industry; • insufficient or excessive single-family home inventory levels by market or price points; • increasing mortgage rates and down payment requirements or constraints on the availability of mortgage financing; • a low level of consumer confidence in the economy or the single-family rental real estate market due to macroeconomic events domestically or internationally; • weak credit markets; • instability of financial institutions; • legislative or regulatory changes (including changes in regulatory interpretations or regulatory practices) that would adversely impact the single-family rental real estate market as well as federal and/or state income tax changes and other tax reform affecting real estate and/or real estate transactions; • insufficient or excessive regional single-family home inventory levels; • adverse changes in local, regional, or national economic conditions; • the inability or unwillingness of consumers to enter into single-family rental lease transactions; • a decrease in the affordability of homes including the impact of rising mortgage rates, home price appreciation and wage stagnation or wage increases that do not keep pace with inflation; • increasing home ownership rates, declining demand for real estate and changing social attitudes toward home ownership; and • natural disasters, such as hurricanes, earthquakes and other events (including pandemics and epidemics) that disrupt local or regional real estate markets. As our SFR revenue is driven in part by leasing and property management of single-family rental real estate and the sale of such properties, any slowdown or decrease in the total number of single-family rental real estate lease transactions for any of the above reasons could adversely affect our SFR operations. The properties our SFR Partners acquire may often be vacant at the time of closing, and our customers may acquire multiple vacant properties in close geographic proximity to one another. They may not be successful in locating residents to lease the individual properties as quickly as they had expected, or at all. Even if they are able to place residents as quickly as they had expected, they may incur vacancies in the future and may not be able to re-lease those properties without longer than assumed delays, which may result in increased renovation and maintenance costs and opportunity costs. Vacant homes may also be at risk for fraudulent activity which could impact our customers’ ability to lease a home. As a result, if vacancies continue for a longer period of time than we expect or indefinitely, our customers may incur additional Table of Contents 31
operating expenses and capital expenditures, and their homes could be substantially impaired, all of which may have a material effect on our SFR operations. The single-family rental real estate market historically has also been seasonal, with greater demand in the spring and summer, and typically weaker demand in late fall and winter, resulting in fluctuations in the quantity, speed and price of transactions on our platform and lease activity. In addition, our investments are and will continue to be concentrated in our existing and target markets and in the single-family rental leasing sector of the real estate industry. A downturn or slowdown in the rental demand for single-family housing caused by adverse economic, regulatory, or environmental conditions, or other events, in our markets may have a greater impact on our SFR operating results than if we had more fully diversified portfolio of SFR Partners and properties. Our SFR Partners depend on residents and their willingness to meet their lease obligations and renew their leases. Poor tenant selection, defaults, and non-renewals by residents may adversely affect our reputation and the financial performance of our SFR operations. Our SFR Partners depend on rental income from residents. As a result, the success of our SFR operations depends in large part upon the ability to attract and retain qualified residents for our customers’ properties. Our reputation and financial performance would be adversely affected if a significant number of residents fail to meet their lease obligations or fail to renew their leases. For example, residents may default on rent payments, make unreasonable and repeated demands for service or improvements, make unsupported or unjustified complaints to regulatory or political authorities, use properties for illegal purposes, damage or make unauthorized structural changes to properties that are not covered by security deposits, refuse to leave the property upon termination of the lease, engage in domestic violence or similar disturbances, disturb nearby residents with noise, trash, odors, or eyesores, fail to comply with Home Owner Association (“HOA”) regulations, sublet to less desirable individuals in violation of our lease, or permit unauthorized persons to live with them. Furthermore, entities directed by, or notionally affiliated with, the federal government as well as some state and local jurisdictions across the United States have from time to time imposed temporary eviction moratoriums if certain criteria are met by residents, which allows residents to defer missed rent payments without incurring late fees, and in certain cases prohibit rent increases. Jurisdictions and other local and national authorities may expand or extend measures imposing restrictions on our ability to enforce residents’ contractual rental obligations and limiting our ability to increase rents. Damage to properties may delay releasing after eviction, necessitate expensive repairs, or impair the rental income or value of the property resulting in a lower than expected rate of return for our services. Increases in unemployment levels and other adverse changes in economic conditions in our markets could result in substantial resident defaults. In the event of a resident default or bankruptcy, we could experience delays in receiving revenue for our services and re leasing the property. A significant number of our SFR Partners’ residential properties are part of HOAs and we and our residents are subject to the rules and regulations of such HOAs, which are subject to change and which may be arbitrary or restrictive, and violations of such rules may subject us to additional fees and penalties and litigation with such HOAs, which would be costly. Some HOAs impose limits on the number of property owners who may lease their homes, which, if met or exceeded, would cause us to incur additional costs to sell the property and opportunity costs from lost rental revenue. Additionally, the governing bodies of the HOAs in which our SFR Partners own property may not make important disclosures about the properties or may block access to HOA records, initiate litigation, restrict the ability to sell our customers’ properties, impose assessments, or arbitrarily change the HOA rules. Our SFR Partners may be unaware of or unable to review or comply with HOA rules before purchasing a property, and any such excessively restrictive or arbitrary regulations may cause them to sell such property at a loss, prevent them from leasing such property, or otherwise reduce their cash flow from such property, which would have an adverse effect on our SFR operations. Several states have enacted laws that provide that a lien for unpaid monies owed to an HOA may be senior to or extinguish mortgage liens on properties. Such actions, if not cured, may give rise to events of default under certain of our customers’ indebtedness, which could have an adverse impact on our SFR operations. Our dependence upon third parties for key services may have an adverse effect on our operating results or reputation if the third parties fail to perform. Though we are internally managed, we use local and national third party vendors and service providers to provide certain services for our SFR Partners’ properties. For example, we typically engage third party home improvement professionals with respect to certain maintenance and specialty services, such as HVAC, roofing, painting, and floor installations. Selecting, managing, and supervising these third party service providers requires significant resources and expertise, and because our portfolio consists of geographically dispersed properties, our ability to adequately select, manage, and supervise such third parties may be more limited or subject to greater inefficiencies than if our properties were more geographically concentrated. An overall labor Table of Contents 32
shortage experienced by our vendors, lack of skilled labor, increased turnover, or labor inflation, or as a result of general macroeconomic factors, could have a material adverse impact on our SFR operations. A failure in the systems of one of our third party service providers, or their inability to perform in accordance with the terms of our contracts or to retain sufficient qualified associates, could have a material adverse effect on our business, results of operations, and financial condition. Notwithstanding our efforts to implement and enforce strong policies and practices regarding service providers, we may not successfully detect and prevent fraud, misconduct, incompetence, or theft by our third party service providers. In addition, any removal or termination of third party service providers would require us to seek new vendors or providers, which would create delays and adversely affect our operations. Poor performance by such third party service providers may reflect poorly on us and could significantly damage our reputation. In the event of fraud or misconduct by a third party, we could also be exposed to material liability and be held responsible for damages, fines, or penalties and our reputation may suffer. In the event of failure by our general contractors to pay their subcontractors, our properties may be subject to filings of mechanics or materialmen liens, which we may need to resolve to remain in compliance with certain debt covenants, and for which indemnification from the general contractors may not be available. We rely on information supplied by prospective residents in managing our business. Through a combination of third parties and our own analysis, a resident screening process is performed, including obtaining appropriate identification, a thorough evaluation of credit history and household income, a review of the applicant’s rental history, and a background check for criminal activity. Leasing decisions are made based on information in rental applications completed by a prospective resident and screened by our third-party partner, and we cannot be certain that this information is accurate. Additionally, these applications are submitted to us at the time of evaluation of a prospective resident, and we do not require residents to provide us with updated information during the terms of their leases, notwithstanding the fact that this information can, and frequently does, change over time. For example, increases in unemployment levels or adverse economic conditions in certain of our markets may adversely affect the creditworthiness of our residents in such markets. Even though this information is not updated, we will use it to evaluate the characteristics of our customers’ portfolio over time. If resident supplied information is inaccurate or our residents’ creditworthiness declines over time, our customers may make poor or imperfect leasing decisions and revenue generated by our customers’ portfolios may contain more risk than we believe. We are subject to payment-related and leasing fraud from tenants and an increase in or failure to deal effectively with fraud, fraudulent activities, fictitious transactions, or illegal transactions. Darwin’s property management platform processes a significant volume and dollar value of transactions on a daily basis. When renters do not fulfill their obligations we have incurred and will continue to incur losses from claims by customers, and these losses may be substantial. Such instances have and can lead to the reversal of payments received by us for such bookings, referred to as a “chargeback.” Our ability to detect and combat fraudulent schemes, which have become increasingly common and sophisticated, could be adversely impacted by the adoption of new payment methods, the emergence and innovation of new technology platforms, including mobile and other devices, and our growth in certain regions, including in regions with a history of elevated fraudulent activity. If we are unable to effectively combat fraud on Darwin’s property management platform, combat the use of fraudulent or stolen credit cards, or otherwise maintain or lower our current levels of charge backs, we may be subject to fines and higher transaction fees or be unable to continue to accept card payments because payment card networks have revoked our access to their networks, any of which could adversely impact our SFR operations. Our payments platform is susceptible to potentially illegal or improper uses, including money laundering, transactions in violation of economic and trade sanctions, corruption and bribery, terrorist financing, fraudulent listings, customer account takeovers, or the facilitation of other illegal activity. Use of our payments platform for illegal or improper uses has subjected us, and may subject us in the future, to claims, lawsuits, and government and regulatory investigations, inquiries, or requests, which could result in liability and reputational harm for us. We have taken measures to detect and reduce fraud and illegal activities, but these measures need to be continually improved and may add friction to our booking process. These measures may also not be effective against fraud and illegal activities, particularly new and continually evolving forms of circumvention. If these measures do not succeed in reducing fraud, our SFR operations could be adversely affected. We may not be able to effectively control the timing and costs relating to the renovation and maintenance of our properties, which may adversely affect our SFR operations. Nearly all of our SFR Partners’ properties require some level of renovation either immediately upon their acquisition or in the future following expiration of a lease or otherwise. Our customers may acquire properties that they plan to renovate extensively. They may also acquire properties that they expect to be in good condition only to discover unforeseen defects and problems that require extensive renovation and capital expenditures. In addition, from time to time, our SFR Partners may perform ongoing maintenance or make ongoing capital improvements and replacements and perform significant renovations and repairs that Table of Contents 33
resident deposits and insurance may not cover. Independent contractors and trade professionals are routinely retained to perform physical repair work and are exposed to all of the risks inherent in property renovation and maintenance, including potential cost overruns, increases in labor and materials costs, delays by contractors in completing work, delays in the timing of receiving necessary work permits, delays in receiving materials, fixtures, or appliances, certificates of occupancy, and poor workmanship. If our assumptions regarding the costs or timing of renovation and maintenance across our SFR Partners’ properties prove to be materially inaccurate, our SFR operations may be adversely affected. Further, renters impose additional risks to owning real property. A rental property may need repairs and/or improvements after each resident vacates the premises, the costs of which may exceed any security deposit provided by the resident when the rental property was originally leased. Accordingly, the cost of maintaining rental properties can be higher than the cost of maintaining owner-occupied homes, which may adversely affect our SFR operations. Laws, regulations, and rules that affect the short-term rental and the long-term rental business may expose us to significant penalties, which could have an adverse effect on our SFR operations. There have been and continue to be legal and regulatory developments that affect the short-term rental and long-term rental of single-family rental properties and buying and selling real estate. Private groups, such as homeowners, landlords, and condominium and neighborhood associations, have adopted contracts or regulations that purport to ban or otherwise restrict single-family rental properties, and third-party lease agreements between landlords and tenants, home insurance policies, and mortgages may prevent or restrict the ability of our customers to list their spaces. These groups and others cite concerns around affordable housing, among other issues, and some state and local governments have implemented or considered implementing rules, ordinances, or regulations governing the short-term or long-term rental of properties. Legislation in other regions also could have a material impact on the way short-term and long-term rentals are regulated. Such regulations include ordinances that restrict or ban our SFR Partners from short-term rentals, long-term rentals, set annual caps on the number of days customers can lease their homes, require customers to register with the municipality or city, or require customers to obtain permission before offering short-term rentals. Macroeconomic pressures and public policy concerns could also lead to new laws and regulations, or interpretations of existing laws and regulations, or widespread enforcement actions that limit the ability of our customers to lease their single-family residences. On January 20, 2026, President Trump signed an executive order, "Stopping Wall Street from Competing with Main Street Homebuyers," aimed at restricting large institutional investors from purchasing single-family homes. The order directs federal agencies to stop facilitating, insuring, or guaranteeing sales of these homes to institutional buyers to increase homeownership opportunities. This executive order, along with any future legislation, could restrict or discourage our customers from entering into SFR arrangements. If laws, regulations, rules, or agreements significantly restrict or discourage our customers in certain jurisdictions from leasing their properties, it could have an adverse effect on our SFR operations. Compliance with governmental laws, regulations, and covenants that are applicable to our SFR Partners’ properties or that may be passed in the future, including tenant relief laws, affordability covenants, permit, license, and zoning requirements, may adversely affect our ability to manage customer properties and could adversely affect our growth strategy. Rental homes are subject to various federal, state, and local laws and regulatory requirements, including permitting, licensing, and zoning requirements. Local regulations, including municipal or local ordinances, restrictions, and restrictive covenants imposed by community developers may restrict the use of our customers’ properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties. Among other things, these restrictions may relate to fire and safety, seismic, asbestos cleanup, or hazardous material abatement requirements. Such local regulations may cause our SFR Partners to incur additional costs to renovate or maintain their properties in accordance with the particular rules and regulations, which could affect the desirability of owning investment properties. Additionally, as the landlord of numerous properties, our SFR Partners are involved from time to time in evicting residents who are not paying their rent or who are otherwise in material violation of the terms of their lease, imposing legal and managerial expenses that raise costs and expose our customers to potential negative publicity. State and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing, or restrict the landlord’s ability to remove the resident on a timely basis or to recover certain costs or charge residents for damage residents cause to the landlord’s premises. Furthermore, state and local governmental agencies may introduce rent control laws or other regulations that limit our SFR Partners’ ability to increase rental rates, which may affect their rental income. Especially in times of recession and economic slowdown, rent control initiatives can amass significant political support. If rent controls unexpectedly became applicable to certain of our customers’ properties, their revenue from and the value of such properties could be adversely affected, as could our SFR operations. Risks Related to Dual Class Structure Table of Contents 34
The dual class structure of Pagaya Ordinary Shares has the effect of concentrating voting power with certain shareholders— in particular, our Founders—which will effectively eliminate your ability to influence the outcome of many important determinations and transactions, including a change in control. Our Class A Ordinary Shares are entitled to one vote per share, and our Class B Ordinary Shares are entitled to 10 votes per share. On June 22, 2022, the Founders, and any person or entity that, through contract, proxy or operation of law, irrevocably delegated the sole and exclusive right to vote the Class B Ordinary Shares held by such person or entity to a Founder (“Permitted Class B Owners”), received all of the Class B Ordinary Shares that were issued and outstanding. By virtue of their holdings of Class B Ordinary Shares, the Founders, in the aggregate, hold approximately 61.1% of our voting power. In addition, the Founders hold Pagaya Options which, if exercised in full and assuming no dilution of their holdings, would result in the Founders’ holding, in the aggregate, approximately 81.7% of our voting power. This percentage may increase if additional shares or derivative securities are issued to our Founders in the form of equity compensation. All outstanding Class B Ordinary Shares held by a Founder and any Permitted Class B Owners will automatically be converted into an equal number of Class A Ordinary Shares (and therefore will have one rather than 10 votes per share) on the earliest to occur of (i) (A) (1) such Founder’s employment as our officer being terminated not for cause, (2) such Founder resigning as our officer, (3) death or Permanent Disability (as defined in the Pagaya Articles) of such Founder or such Founder’s bankruptcy; provided, however, that if such Founder or such Permitted Class B Owner validly provides for the transfer of some or all of his, her or its Class B Ordinary Shares to one or more of the other Founders or Permitted Class B Owners affiliated with one or more of the other Founders in the event of death or Permanent Disability, then such Class B Ordinary Shares that are transferred to another Founder or Permitted Class B Owner affiliated with one or more of the other Founders shall remain Class B Ordinary Shares and shall not convert into an equal number of Class A Ordinary Shares or (4) the appointment of a receiver, trustee or similar official in bankruptcy or similar proceeding with respect to a Founder or his Class B Ordinary Shares and (B) such Founder no longer serving on the Pagaya Board; (ii) 90 days after such Founder is terminated for cause, subject to certain exceptions, or (iii) the earliest to occur of (A) such time as the Founders and their permitted transferees first collectively hold less than a specified percentage of our total issued and outstanding ordinary share capital – 8% as of the date of this Annual Report, which percentage will be reduced to 7.5% following the 2026 annual meeting of shareholders, and (B) the 15th anniversary of the EJFA Closing. See Exhibit 4.9 to this Annual Report for further discussion of the terms of the Pagaya Articles, including the circumstances under which a Founder’s Class B Ordinary Shares will convert into Class A Ordinary Shares. Accordingly, except with respect to the limited matters as to which Israeli corporate law requires approval by a majority of votes cast by shareholders other than controlling shareholders, and although such Founders are not parties to any voting agreement (other than the Pagaya Voting Agreement) or similar arrangement and are free to act independently of one another and without coordination or collaboration, such Founders will collectively effectively control all matters submitted to the our shareholders for the foreseeable future, including the election of directors, amendments of our organizational documents, compensation matters, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring shareholder approval. The Founders may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control is likely to have the effect of limiting the likelihood of an unsolicited merger proposal, unsolicited tender offer, or proxy contest for the removal of directors. As a result, our governance structure and the adoption of the Pagaya Articles may have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace our directors and management. The dual class structure of Pagaya Ordinary Shares may adversely affect the trading market for Class A Ordinary Shares. Our dual class structure has likely been a contributing factor, either directly or indirectly, in a lower or more volatile market price of Class A Ordinary Shares, and may also result in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with dual class or multi-class share structures in certain of their indices. In July 2017, S&P Dow Jones and FTSE Russell announced changes to their eligibility criteria for the inclusion of shares of public companies on certain indices, including the Russell 2000, the S&P 500, the S&P Mid Cap 400 and the S&P SmallCap 600, to disfavor companies with multiple classes of shares from being added to these indices. Beginning in 2017, MSCI Inc. (“MSCI”), a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. As a result, our dual class capital structure would make us ineligible for inclusion in indices that exclude companies with multi-class share structures, and mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing in Class A Ordinary Shares. We cannot assure you that other stock indices will not take a similar approach to S&P Dow Jones or FTSE Russell in the future. Exclusion from indices could make Class A Ordinary Shares less attractive to investors and, as a result, the market price of Class A Ordinary Shares could be adversely affected. Risks Related to Our Legal and Regulatory Environment Table of Contents 35
Litigation, regulatory actions, consumer complaints and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses. In the ordinary course of business, we may be named as a defendant in various legal actions, including litigation, involving our Partners’ financial products. All such legal actions are inherently unpredictable and, regardless of the merits of the claims, litigation is often expensive, time-consuming, disruptive to our operations and resources, and distracting to management. Generally, litigation involving our Partner’s financial products arises from the dissatisfaction of a consumer with the products or services offered by our Partners; however, some of this litigation may arise from other matters, including claims of violation of laws related to collections efforts, and credit reporting. Our involvement in any such matter also could cause significant harm to our or our Partners’ reputations and divert management attention from the operation of our business, even if the matters are ultimately determined in our favor. If resolved against us, legal actions could result in excessive verdicts and judgments, injunctive relief, equitable relief, and other adverse consequences that may affect our financial condition and how we operate our business. In addition, a number of participants in the consumer financial services industry have been the subject of putative class action lawsuits, state attorney general actions, other state or local regulatory or enforcement actions, and federal regulatory enforcement actions, including actions relating to alleged unfair, deceptive or abusive acts or practices, violations of state licensing and lending laws, including state usury and disclosure laws, actions alleging discrimination on the basis of race, ethnicity, gender or other prohibited bases, and allegations of noncompliance with various state and federal laws and regulations relating to originating and collecting consumer finance loans and other consumer financial services and products. In the current regulatory environment, increased regulatory compliance efforts and enhanced regulatory enforcement have resulted in us undertaking significant time-consuming and expensive operational and compliance improvement efforts, which may delay or preclude our or our Partners’ ability to provide certain new products and services, including the use of our AI technology by Partners. There is no assurance that these regulatory matters or other factors will not, in the future, affect how we conduct our business and, in turn, have a material adverse effect on our business. In particular, legal proceedings brought under state consumer protection and anti- discrimination statutes or under any of the various federal consumer financial services statutes, including those prohibiting discrimination in lending and unfair, deceptive, and abusive acts or practices, may result in a separate fine assessed for each statutory and regulatory violation or substantial damages from class action lawsuits, potentially in excess of the amounts we earned from the underlying activities. Many of the consumer and credit assets that the Financing Vehicles acquire are governed by agreements that include arbitration clauses. If these arbitration agreements were to become unenforceable for any reason, or such clauses are not included, we could experience an increase to our consumer litigation costs and exposure to potentially damaging class action lawsuits, with a potential material adverse effect on our business and results of operations. In addition, from time to time, through our operational and compliance controls, we identify compliance issues that require us to make operational changes and, depending on the nature of the issues, could result in financial remediation. These self-identified issues and remediation payments could be significant, depending on the issues and impact, and could generate litigation or regulatory investigations that subject us to additional risk. If we fail to comply with or facilitate compliance with, or our Partners fail to comply with, the variety of federal, state and local laws to which we or they are subject, including those related to consumer protection, consumer finance, lending, fair lending, data protection, and investment advisory services, or if we or our Partners are found to be operating without having obtained necessary state or local licenses, it may result in regulatory action, litigation, or monetary payments or may otherwise negatively impact our reputation, business, and results of operations, and may prevent us from serving users in jurisdictions where those regulations apply. Our Partners and prospective Partners are highly regulated and are generally required to comply with stringent regulations in connection with performing business functions that our products and services address. Additionally, we facilitate compliance with these regulatory requirements. While we currently operate our business in an effort to ensure our business itself is not subject to extensive regulation, there is a risk that certain regulations could become applicable to us, including as we expand the functionality and use of our AI technology and network. In addition, we and our Partners, vendors, and other service providers must comply with laws and regulatory regimes that apply to us directly and our Partners, vendors, and other service providers indirectly, including through certain uses of our products and services, and in areas such as consumer finance and lending, investment advisory and securities law, and data protection, use and cybersecurity, and through our relationships with our Partners and the Financing Vehicles. We must comply with regulatory regimes or facilitate compliance with regulatory regimes on behalf of our Partners that are independently subject to supervision by federal and state financial services and consumer protection regulators, including those Table of Contents 36
applicable to consumer credit transactions, account servicing and debt collection, and the purchase and sale of whole loans and other related transactions. Certain state laws generally regulate interest rates, fees and other charges, require certain disclosures and regulate various loan terms and conditions. In addition, other federal and state laws may apply to loan originations, underwriting, allocation of finance assets originated by our Partners, the servicing and collection of loans and other obligations, the purchase and sale of whole loans or other obligations or securitization vehicles. Certain states have adopted laws regulating and requiring licensing by parties that engage in certain activities relating to consumer finance transactions, including facilitating, offering and assisting with such transactions in certain circumstances. Furthermore, certain states and localities have also adopted laws requiring licensing for consumer debt collection or purchasing or selling consumer loans or other obligations. The application of some consumer finance licensing laws to our AI technology, the networks of our Partners and the related activities we perform is unclear or debatable, which increases the risk that we may be deemed noncompliant with such licensing laws. In addition, state licensing requirements may evolve over time, including, in particular, recent trends toward increased licensing requirements and regulation of parties engaged in loan solicitation activities. If we or our Partners were found to be in violation of applicable state licensing requirements by a court or a state, federal, or local enforcement agency, our business could be harmed or limited, we could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties and other penalties or consequences, and the obligations from our Partners could be rendered void or unenforceable, in whole or in part, any of which could have a material adverse effect on our business. In particular, certain statutes, laws, regulations and rules to which we, our Partners, the Financing Vehicles or their respective service providers are or may be subject, and with which we facilitate or may facilitate compliance, include: • foreign, U.S. federal and state lending statutes and regulations that require certain parties, including our Partners, to hold licenses or other government approvals or filings in connection with specified activities, and impose requirements related to marketing and advertising, transaction disclosures and terms, fees and interest rates, usury, credit discrimination, credit reporting, servicemember relief, debt collection, repossession, unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, cybersecurity, conduct in connection with data breaches and money transmission; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act, and similar state and municipal fair lending laws; • foreign, U.S. federal and state securities laws, including, among others, the Securities Act, the Exchange Act, the Investment Advisers Act, and the Investment Company Act rules and regulations adopted under those laws, and similar foreign, state laws and regulations which govern securities law, advisory services, Financing Vehicles or how we generate or purchase consumer credit assets, other loan product regulations, the Israeli Joint Investments in Trust Law, 5754-1994, the Israeli Securities Law, 5728-1968, the Israeli Law for Regulation of Investment Advice, Investment Marketing and Portfolio Management, 5755-1995, the Israeli Law for Supervision of Financial Services (Regulated Financial Services), 5776-2016, and the Israeli Banking (Licensing) Law, 5741-1981; • foreign, U.S. federal and state laws and regulations addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection, and processing of certain types of data, including, among others, Fair Credit Reporting Act (the “FCRA”), Gramm-Leach-Bliley Act (the “GLBA”), Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, Controlling the Assault of Non- Solicited Pornography and Marketing (the “CAN-SPAM”), Telephone Consumer Protection Act (the “TCPA”), Federal Trade Commission Act (the “FTC Act”), California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”) (collectively, “CCPA”), General Data Protection Regulation (the “GDPR”) and the Protection of Privacy Law 5741-1981; • the FCRA and Regulation V promulgated thereunder, which imposes certain obligations on users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining or using consumer reports, taking adverse action on the basis of information from consumer reports, the accuracy and integrity of furnished information, addressing risks of identity theft and fraud and protecting the privacy and security of consumer reports and consumer report information and other related data use laws and regulations; • the GLBA and Regulation P promulgated thereunder, which includes limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial institutions to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other privacy laws and regulations; Table of Contents 37
• the U.S. credit risk retention rules promulgated under the Dodd-Frank Act, which require a securitizer of securitization vehicles to retain an economic interest in the credit risk of the assets collateralizing the securitization vehicles; • the Truth in Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their consumer credit obligations, require creditors to comply with certain practice restrictions, limit the ability of a creditor to impose certain terms, impose disclosure requirements in connection with credit card applications and solicitations, and impose disclosure requirements in connection with credit advertising; • Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive, unconscionable, unlawful or abusive acts or practices; • the Credit Practices Rule, which (i) prohibits creditors from using certain contract provisions that the Federal Trade Commission has found to be unfair to consumers; (ii) requires creditors to advise consumers who co-sign obligations about their potential liability if the primary obligor fails to pay; and (iii) prohibits certain late charges; • the FRB, OCC (as defined below) and FDIC guidance related to model risk management and management of vendors and other bank specific requirements pursuant to the terms of service agreements with banks and the examination and enforcement authority of the FDIC under the Bank Service Company Act; • U.S. federal and state regulation and licensing requirements related to the auto insurance and finance industries, including related to being a manager general agent; • the U.S. Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; • the Servicemembers Civil Relief Act, which allows military members to suspend or postpone certain civil obligations, requires creditors to reduce the interest rate to 6% on loans to military members under certain circumstances, and imposes restrictions on enforcement of loans to servicemembers, so that military members can devote full attention to military duties; • the Military Lending Act, which requires those who lend to “covered borrowers,” including members of the military and their dependents, to only offer Military Annual Percentage Rates (“APRs”) (a specific measure of all-in-cost-of- credit) under 36%, prohibits arbitration clauses in loan agreements, and prohibits certain other loan agreement terms and lending practices in connection with loans to military servicemembers, among other requirements, and for which violations may result in penalties including voiding of a loan agreement; • the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require creditors and loan servicers to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • the Right to Financial Privacy Act and similar state laws enacted to provide the financial records of financial institution customers a reasonable amount of privacy from government scrutiny; • the Bank Secrecy Act and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • the regulations promulgated by the Office of Foreign Assets Control (“OFAC”) under the U.S. Treasury Department related to the administration and enforcement of sanctions against foreign jurisdictions and persons that threaten U.S. foreign policy and national security goals, primarily to prevent targeted jurisdictions and persons from accessing the U.S. financial system; • governmental laws, regulations, and covenants that are applicable to the properties that our Financing Vehicles have interests in, including tenant relief laws, restrictions on evictions and collections, rent control laws, affordability covenants, permit, license, and zoning requirements; • U.S. Fair Housing Act and state and local fair housing laws; and • other foreign, U.S., federal, state and local statutes, rules and regulations. We and our Partners may not always have been, and may not always be, in compliance with these and other applicable statutes, regulations, rules and other laws. Compliance with these requirements is costly, time-consuming and limits our operational flexibility. Additionally, Congress, the states and regulatory agencies, as well as local municipalities, could further regulate consumer financial services in ways that make it more difficult or costly for us to operate our AI technology and offer related services or facilitate the allocation of obligations from our Partners. These laws also are often subject to changes that could severely limit the operations of our business model. Further, changes in the regulatory application or judicial interpretation of the laws and regulations applicable to financial institutions also could impact the manner in which we conduct our business. The regulatory environment in which financial institutions operate has become increasingly complex, and following the financial Table of Contents 38
crisis that began in 2008, supervisory efforts to enforce relevant laws, regulations and policies have become more intense. Additionally, states are increasingly introducing and, in some cases, passing laws that restrict interest rates and APRs on loans similar to the assets acquired by the Financing Vehicles. For example, California has enacted a “mini-CFPB,” which increases its oversight over partnership relationships and strengthens state consumer protection authority of state regulators to police debt collections and unfair, deceptive or abusive acts and practices. Additionally, voter referenda have been introduced and, in some cases, passed restrictions on interest rates and/or APRs. If such legislation or bills were to be adopted, or state or federal regulators seek to restrict regulated financial institutions such as our Partners from engaging in business with us in certain ways, our Partners’ ability to originate assets in certain states, and the ability of Financing Vehicles to purchase such assets, could be greatly reduced, and as a result, our business, financial condition and results of operations would be adversely affected. In addition, we are currently subject to a variety of, and may in the future become subject to, additional foreign, federal, state, and local laws that are continuously changing, including laws related to: the real estate brokerage, auto insurance, real estate ownership and services industries, and data security, cybersecurity, privacy, and consumer protection. These laws can be costly to comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations. Where applicable, we seek to comply with applicable law. Although we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance can be given that our compliance policies and procedures will be effective. Compliance with these requirements is also costly, time-consuming and limits our operational flexibility. If we, our Partners or the Financing Vehicles are found to not comply with applicable laws, we could become subject to greater scrutiny by regulatory agencies, face other sanctions or be required to obtain a license in such jurisdiction, which may have an adverse effect on our ability to continue to facilitate or acquire assets or make our network available to Partners and their customers in particular states, which may harm our business. In addition, non-compliance could subject us to damages, litigation, class action lawsuits, regulatory action, investigations, administrative enforcement actions, monetary payments to our Partners or asset investors, rescission rights held by investors in securities offerings and civil and criminal liability, all of which would harm our business and reputation. Changes in laws or regulations relating to privacy, cybersecurity, data protection, or the protection, use or transfer of personal information, or any actual or perceived failure by us to comply with such laws and regulations or any other obligations relating to privacy, data protection, or the protection or transfer of personal information, could adversely affect our business. We, our Partners, vendors, and other service providers, receive, collect, use, disclose, transmit, store and otherwise process a large volume of personally identifiable information and other sensitive data relating to individuals, such as our Partners’ customers, asset investors and our employees. Our use, receipt, and other processing of data in our business subjects us to numerous state, federal and foreign laws and regulations, addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection, and processing of certain types of data, including, for example, the GLBA, Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, CAN-SPAM, TCPA, FCRA, FTC Act, and the CCPA. These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in interpretation or enforcement, and may be inconsistent from one jurisdiction to another. For example, on December 9, 2021, the FTC adopted amendments to the GLBA’s Safeguards Rule, which requires financial services providers, like our Partners, to develop, implement, and maintain a comprehensive information security program. The amendments provide more prescriptive security controls that financial services providers are required to implement, such as specific access and authentication controls, risk assessment requirements, and oversight by appointment of a Chief Information Security Officer who is required to provide annual written reports to the board of directors. In addition, the FTC has brought enforcement actions against third-party service providers of financial services providers directly and against financial services providers for failures by service providers to implement appropriate controls to safeguard consumers’ personal information. As another example, the CCPA applies to personal data of consumers, business representatives, and employees who are California residents and requires businesses to provide specific disclosures to California consumers and honor requests of consumers to exercise certain data privacy rights, including, among other things, the right to request a copy from a covered company of the personal information collected about them, the right to request correction of such personal information, the right to request deletion of such personal information, and the right to opt out of certain disclosures of personal information. The California Attorney General can enforce the CCPA, including seeking an injunction and civil penalties of up to $7,500 per intentional violation. A number of other U.S. states have also enacted, or are considering enacting, comprehensive data privacy laws that share similarities with the CCPA. Certain state laws and regulations may be more stringent, broader in scope, or offer greater individual rights, with respect to personal data than federal or other state laws and regulations, and such laws and regulations may differ Table of Contents 39
from each other, which may complicate compliance efforts and increase legal risk and compliance costs for us and the third parties upon whom we rely. Changes in laws or regulations relating to privacy, cybersecurity, data protection, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations like the GLBA, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could greatly increase the cost of providing our network, require significant changes to our operations, or even prevent us from providing our network in jurisdictions in which we currently operate and in which we may operate in the future. Moreover, the U.S.Congress has considered, and in the future will likely consider, various proposals for additional comprehensive national data privacy and cybersecurity legislation. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions, and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data, and could result in increased compliance costs and/or changes in business practices and policies. In addition, some jurisdictions, such as New York, Massachusetts, and Nevada have enacted more generalized data security laws that apply to certain data that we process. We cannot yet fully determine the impact these or future laws, rules, regulations, and industry standards may have on our business or operations. Any such laws, rules, regulations, and industry standards may be inconsistent among different jurisdictions, subject to differing interpretations, or may conflict with our current or future practices. Additionally, our Partners’ customers may be subject to differing privacy laws, rules, and legislation, which may mean that they require us to be bound by varying contractual requirements applicable to certain other jurisdictions. Adherence to such contractual requirements may impact our receipt, use, storage, sharing, disclosure and other processing of various types of information including financial information and other personal information, and may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve. Complying with these requirements and changing our policies and practices may be onerous and costly, and we may not be able to respond quickly or effectively to regulatory, legislative and other developments. These changes may in turn impair our ability to offer our existing or planned products and services and/or increase our cost of doing business. Additionally, we have incurred, and may continue to incur, significant expenses in an effort to comply with privacy, cybersecurity, data protection, and information security standards and protocols imposed by law, regulation, industry standards, or contractual obligations. In particular, with laws and regulations such as the FCRA, GLBA, CCPA and potentially other laws and regulations that may be proposed or amended, imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices and may incur significant costs and expenses in an effort to do so. As our business grows, we must also remain compliant with privacy and data security laws from other jurisdictions outside of the United States and Israel, including the European Union’s General Data Protection Regulation (“EU GDPR”) and the United Kingdom’s GDPR (“UK GDPR”). The EU GDPR and the UK GDPR govern the collection, use, disclosure, transfer or other processing of personal data of persons located in the European Economic Area (the “EEA”) and the United Kingdom and the data practices of companies operating in the EEA and the United Kingdom, respectively. Among other things, the EU GDPR and the UK GDPR impose requirements regarding the security of personal data and notification of data processing obligations to competent national data protection authorities, provide for lawful bases on which personal data can be processed, provide for an expansive definition of personal data and require changes to informed consent practices. In addition, the EU GDPR and the UK GDPR provide for heightened scrutiny of transfers of personal data from the EEA and the United Kingdom, to the United States and other jurisdictions that local regulators do not recognize as having “adequate” data protection laws, and impose substantial fines for breaches and violations (up to the greater of €20 million under the EU GDPR, £17.5 million under the UK GDPR or, in each case, 4% of an enterprise’s consolidated annual worldwide gross revenue). The EU GDPR and the UK GDPR also confer a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations. While the UK GDPR currently imposes substantially the same obligations as the GDPR, the UK GDPR will not automatically incorporate changes to the GDPR going forward. Moreover, the UK Data (Use and Access) Act, which makes several modifications to the UK GDPR, received Royal Assent in June 2025, with implementation beginning in August 2025. Such modifications deviate from the GDPR and permit further deviations in the form of regulatory guidance or secondary legislation, which creates a risk of divergent parallel regimes and related uncertainty, along with the potential for increased compliance costs and risks for affected businesses. We may use AI/ML to assist us in making certain decisions, which is regulated by certain privacy laws. Due to inaccuracies or flaws in the inputs, outputs, or logic of the AI/ML, the model could be biased and could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits. Despite our efforts to comply with applicable laws, regulations, and other obligations relating to privacy, cybersecurity, data protection, and information security, it is possible that our interpretations of the law, practices, or our network could be Table of Contents 40
inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or obligations. Our failure, or the failure by our Partners, vendors, service providers, or Partners’ customers, to comply with applicable laws or regulations or any other obligations relating to privacy, cybersecurity, data protection, or information security, or any compromise of security that results in unauthorized access to, or use or release of personal information or other data relating to consumers or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing Partners from working with us, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation (including class claims), any of which could adversely affect our business, financial condition, and results of operations. Even if not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely affect our business, financial condition, and results of operations. A heightened regulatory and enforcement environment in the financial services industry may have an adverse impact on our Partners and our business. Since the enactment of the Dodd-Frank Act, a number of substantial regulations affecting the supervision and operation of the financial services industry within the United States have been adopted, including those that establish the CFPB. The CFPB has issued guidance that applies to, and conducts direct examinations of, “supervised banks and nonbanks” as well as “supervised service providers”. In addition, the CFPB regulates consumer financial products and services. Certain of our Partners are also subject to regulation by federal and state authorities and, as a result, could pass through some of those compliance obligations to us. To the extent this oversight or regulation negatively impacts our Partners, our business, financial condition, and results of operations could be adversely affected because, among other matters, our Partners could have less capacity to purchase products and services from us, could decide to avoid or abandon certain lines of business, or could seek to pass on increased costs to us by re-negotiating their agreements with us. Additional regulation, examination, and oversight of us could require us to modify the manner in which we contract with or provide products and services to our Partners, require us to invest additional time and resources to comply with such oversight and regulations, or limit our ability to update our existing products and services, or require us to develop new ones. Any of these events, if realized, could adversely affect our business, financial condition, and results of operations. If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements, our activities may be restricted, and our ability to conduct business could be materially adversely affected. If we were deemed to be an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business. The Investment Company Act contains substantive legal requirements that regulate the manner in which an “investment company” is permitted to conduct its business activities. The Investment Company Act defines an “investment company” as, in pertinent part, an issuer that holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or, absent an applicable exemption, owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. However, an issuer engaged primarily, directly or through a wholly-owned subsidiary or subsidiaries (that themselves are not investment companies or relying on an exclusion from the definition of “investment company” set out in Sections 3(c)(1) or 3(c)(7)), in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities is excluded from the definition of “investment company.” We currently hold interests in securitization transactions in order to satisfy U.S. risk retention requirements, which in the aggregate exceed 40% of our assets (exclusive of U.S. government securities and cash items) reflected on our balance sheet. Nonetheless, we believe that we are engaged primarily in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities and we have conducted, and intend to continue to conduct, our business in a manner that does not result in us being characterized as an investment company. We believe that we are engaged primarily in the business of developing and implementing proprietary AI technology and related software solutions to assist Partners to originate loans and other assets with more effective credit decision-making processes, and sponsoring, managing and/or administering Financing Vehicles; and we are not in the business of investing, reinvesting or trading in securities. Although we also believe that our primary source of income is fees earned in exchange for the provision of services and not income on investment securities, to avoid being deemed an investment company, we may decide to forego attractive opportunities to expand our business. If we are deemed to be an investment company under the Investment Company Act, including as a result of changes in our business in the future (although no such changes are currently anticipated), we may be required to institute burdensome Table of Contents 41
compliance requirements, restricting our activities in a way that could adversely affect our business, financial condition and results of operations. The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, prohibit the issuance of stock options, and impose certain governance requirements. We intend to continue to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act. However, if anything were to happen that would cause us to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on our capital structure, ability to transact business with affiliates and ability to compensate key employees, could make it impractical for us to continue our business as currently conducted. Compliance with the requirements of the Investment Company Act applicable to registered investment companies may make it difficult for us to continue our current operations and could materially and adversely affect our business, financial condition and results of operations. If we were ever deemed to be in noncompliance with the Investment Company Act, we could also be subject to various penalties, including administrative or judicial proceedings that might result in censure, fine, civil penalties, cease-and-desist orders or other adverse consequences, as well as private rights of action, any of which could materially adversely affect our business. The SEC oversees and directly regulates the activities of our subsidiaries that are registered investment advisers under the Investment Advisers Act. The Investment Advisers Act imposes specific restrictions on an investment adviser’s ability to conduct its investment advisory business and operations. Our registered investment advisers, including the registered investment advisor we acquired in connection with our acquisition of Theorem Technology, Inc., and certain other parts of our business are subject to additional requirements that cover, among other things, disclosure of information about our business to Partners and asset investors; maintenance of written compliance policies and procedures; conflicts of interest; agency and principal transactions; maintenance of extensive books and records; restrictions on the types of fees we may charge, including network AI fees; solicitation arrangements; maintaining effective compliance programs; custody of client assets; client privacy; advertising; and proxy voting. Under the Investment Advisers Act, an investment adviser (whether or not registered under the Investment Advisers Act) has fiduciary duties to its clients. The SEC has interpreted these duties to impose standards, requirements and limitations on, among other things, trading for proprietary, personal and client accounts; conflicts of interest; allocations of investment opportunities among clients or other services that help managers make investment decisions; execution of transactions; and recommendations to clients. Our investment adviser subsidiaries are subject to regular examinations by the SEC; any adverse findings resulting from such examination may result in administrative enforcements or significant reputational harm. Failure to comply with the obligations imposed by the Investment Advisers Act could result in investigations, sanctions, restrictions on the activities of us or our personnel and reputational damage. We and the Financing Vehicles rely on complex exemptions from statutes in conducting the funding component of our business. We regularly rely on exemptions from various requirements of the Securities Act, the Exchange Act, the Investment Company Act, the Commodity Exchange Act and the U.S. Employee Retirement Income Security Act of 1974, as amended, in conducting the funding component of our business with the Financing Vehicles. The requirements imposed by regulators are designed primarily to ensure the integrity of the financial markets and to protect asset investors and are not designed to protect our shareholders. Consequently, these regulations often serve to limit our activities and impose burdensome compliance requirements. These exemptions are highly complex, the application to our business and Financing Vehicles can be ambiguous and may in certain circumstances depend on compliance by third parties whom we do not control. If for any reason these exemptions were to become unavailable to us, or their applicability challenged, we could become subject to regulatory action or third-party claims and our business could be materially and adversely affected. Securitizations expose us to certain risks, and we can provide no assurance that we will be able to access the securitization market in the future, which could materially and adversely affect our ability to execute on our business plan. We have sponsored the securitizations, and expect in the future to sponsor securitizations, of certain assets acquired from our Partners by the Financing Vehicles. In asset-backed securities transactions, a special purpose entity (or “SPE”), which we administer, purchases pools of assets from certain of our Partners. Concurrently, each securitization SPE typically issues notes and certificates pursuant to the terms of indentures and trust agreements. The securities issued by the SPEs in securitization vehicles transactions are each secured by the pool of assets owned by the applicable SPE. We may retain debtor equity interests in the SPEs. Such equity interests are residual interests in that they entitle the equity owners of such SPEs, including us, to a certain proportion of the residual cash flows, if any, from the loans and any assets remaining in such SPEs once the securities are satisfied and paid in full. Further, we, as securitization sponsor or through a majority-owned affiliate, will hold either an eligible horizontal interest in the most subordinate class of securities or an eligible vertical interest of a portion of each class of securities offered to satisfy U.S. risk retention requirements, and we may purchase securities in excess of the amount required pursuant to Table of Contents 42
U.S. risk retention rules. As a result of challenging credit and liquidity conditions, the value of the subordinated securities that we retain or other transaction participants purchase in such SPEs might be reduced or, in some cases, eliminated. During periods of financial disruption, such as the financial crisis that began in 2008 and the COVID-19 pandemic that began in early 2020, the securitization market has been constrained or has contracted, and this could occur again in the future. In addition, other matters, such as (i) accounting standards applicable to securitization transactions and (ii) capital and leverage requirements applicable to banks and other regulated financial institutions holding asset-backed securities, could result in decreased investor demand for securities issued through our securitization transactions, or increased competition from other institutions that undertake securitization transactions. In addition, compliance with certain regulatory requirements, including the Dodd-Frank Act, the Investment Company Act and the so-called “Volcker Rule,” may affect the type of securitizations that we are able to complete or limit our ability to effect securitization transactions entirely. Recent deterioration in the securitization markets and potential future declines may materially impact our revenues, income and cash flow. In particular, certain of our historical Financing Vehicles have had substantially higher delinquencies when compared to similar securitizations of our 2020 vintage, which may result in a decline in our revenue, income and cash flow. Furthermore, in February 2025, the Israeli government published a bill proposing a legal framework for the regulation of securitization transactions, which are presently not subject to specific regulatory regime. The enactment of the bill remains uncertain, as does the final form of the legislation, should it be adopted. If promulgated, the new regulatory framework might affect the Company’s ability to raise funds from Israeli investors or impose additional legal and compliance obligations in connection with such engagements. If it is not possible or economical for us to securitize consumer credit assets in the future, we would need to seek alternative financing to support our business and the products and services we provide to our Partners. Such funding may be unavailable on commercially reasonable terms, or at all. If the cost of such purchasing consumer credit assets were to be higher than that of our securitizations, the fair value of the consumer credit assets would likely be reduced, which would negatively affect the investment performance of certain of the Financing Vehicles and our results of operations. If we are unable to access such alternative financing, our ability to direct the purchase of consumer credit assets by securitization vehicles and our results of operations, financial condition and liquidity would be materially adversely affected. Pursuant to the terms of the securitization transaction documents, we may be entitled to excess amounts, if any, generated by the sale of securitization notes and certificates to asset investors, which represents a significant source of our earnings. We cannot assure you that the Financing Vehicles will continue to purchase consumer credit assets or that they will continue to purchase assets in transactions that generate the same excess cash flow, spreads and/or fees that have historically been purchased. Potential asset investors may also reduce the prices they are willing to pay for the securitization notes and/or certificates they purchase during periods of economic slowdown or recession to compensate for any increased risks. A reduction in the sale price of the securitization notes and/or certificates would negatively impact our operations and returns. Any sustained decline in demand for consumer credit assets, or any increase in delinquencies, defaults or losses that result from economic downturns, may also reduce the price we receive on securitization notes and/or certificates, which would harm our business, financial condition and results of operations. We are subject to anti-corruption, anti-bribery, anti-money laundering, economic and trade sanctions and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations. We may be subject to certain economic and trade sanctions laws and regulations, export control and import laws and regulations, including those that are administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, the Israeli Ministry of Defense, the Israeli Ministry of Finance, and other relevant governmental authorities. We are also subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the United Kingdom Bribery Act 2010, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 5737-1977, the Israeli Prohibition on Money Laundering Law, 5760-2000 and other anti-bribery laws in countries in which we conduct our activities. These laws generally prohibit companies, their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. In addition, the FCPA’s accounting provisions require us to maintain accurate books and records and a system of internal accounting controls. We have policies, procedures, systems, and controls designed to promote compliance with applicable anti-corruption laws. As we increase and scale our business, we may engage with business partners and third-party intermediaries to market our solutions and obtain necessary permits, licenses and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. Table of Contents 43
We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, Partners, asset investors and agents, even if we do not authorize such activities. Our Partners may have customers, or asset investors may be, in jurisdictions that are subject to economic and financial sanctions programs or trade embargoes maintained by the United States (including sanctions administered by OFAC), Israel (including the Israeli Trade with the Enemy Ordinance, 1939, the Israeli Defense Export Control Law, 5767-2007, the Israeli Import and Export Order (Control of Dual-Purpose Goods, Services and Technology Exports), 5767-2006 and other sanctions laws and specialized lists), the European Union, the United Kingdom, and other applicable jurisdictions. These sanctions generally prohibit the sale of products or provision of services to jurisdictions subject to a full embargo (“Sanctioned Countries”) and to sanctioned parties. We have taken steps to avoid having transactions with those in Sanctioned Countries and have implemented various control mechanisms designed to prevent unauthorized dealings with Sanctioned Countries or sanctioned parties going forward. Although we have taken precautions to prevent our solutions from being provided, deployed or used in violation of sanctions laws, due to the remote nature of our solutions and the potential for manipulation using virtual private networks, we cannot assure you that our policies and procedures relating to sanctions compliance will prevent any violations. If we are found to be in violation of any applicable sanctions regulations laws and regulations, it could result in significant fines or penalties and possible incarceration for responsible employees and managers, as well as reputational harm and loss of business. Despite our compliance efforts and activities, there can be no assurance that our employees or representatives will comply with the relevant laws and we may be held responsible. Non-compliance with anti-corruption, anti-money laundering, export control, economic and trade sanctions and other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are initiated, governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition and results of operations could be materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees. As a general matter, enforcement actions and sanctions could harm our business, financial condition and results of operations. As the political and regulatory framework for AI technology and machine learning evolves, our business, financial condition and results of operations may be adversely affected. The political and regulatory framework for AI technology and machine learning is evolving and remains uncertain. It is possible that new laws and regulations will be adopted in the United States, or in certain U.S. states, or existing laws and regulations may be interpreted in new ways, that would affect the operation of our network and the way in which we use AI technology and machine learning, including with respect to lending laws, fair lending laws and model risk management guidance. In the last few years, U.S. banking and consumer protection regulators have increased focus on financial institutions that rely on AI technology in their business and have sent requests for information to various companies to better understand the use of AI technology and machine learning by financial institutions. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. In addition, a number of U.S. lawmakers have stated that algorithmic underwriting technologies may result in disparate impact discrimination and urged consumer regulatory agencies to increase enforcement actions where necessary to ensure that consumer lending technology is not being used to discriminate or exacerbate existing biases. Our proprietary technology uses machine learning models as a subset of our AI, but those machine learning models are static and do not have the ability to self-correct, self-improve, and/or learn over time, and any change to the models requires human intervention, testing, validation, and governance approvals before a change can be made. Nevertheless, we face a risk that the use of machine learning in our models, or one or more variables in our model, could be deemed to have resulted in a “disparate impact” on protected groups. Such a result would require us to revise the loan decisioning model in a manner that might generate lower approval rates or higher credit losses. If obligations by one or more Partners that utilize our network were subject to successful challenge that the Partner was not the “true lender,” such obligations may be unenforceable, subject to rescission or otherwise impaired, we or other program participants may be subject to penalties, and/or our commercial relationships may suffer, each of which would adversely affect our business, financial condition and results of operations. Obligations are originated by our Partners in reliance on the fact that our Partners or their bank partners (if applicable) are the “true lenders” for such obligations rather than us or our Partners (if applicable). That true lender status determines various program details, including that we do not hold licenses required solely for being the party that extends credit to consumers, among other requirements. Because the obligations facilitated with the assistance of our AI technology are originated by our Partners or their bank partners, many state consumer financial regulatory requirements, including usury restrictions (other than Table of Contents 44
the restrictions of the state in which a Partner originating a particular obligation is located) and many licensing requirements and substantive requirements under state consumer credit laws, are treated as inapplicable based on principles of federal preemption or express exemptions provided in relevant state laws for certain types of financial institutions or obligations they originate. Certain recent litigation and regulatory enforcement activities have challenged, or are currently challenging, the characterization of certain Partners or their bank partners as the “true lender” in connection with programs involving origination relationships between a bank partner and non-bank lending network or program manager. For example, the Colorado Administrator has entered into a settlement agreement with certain banks and nonbanks that addresses this true lender issue. Specifically, the settlement agreement sets forth a safe harbor indicating that a bank is the true lender if certain specific terms and conditions are met. However, other states could also bring lawsuits based on these types of relationships. For example, on June 5, 2020, the Washington, DC Attorney General filed a lawsuit against online lender Elevate Credit International Limited (“Elevate”) for allegedly deceptively marketing high-cost loans with interest rates above the Washington, DC usury cap. The usury claim is based on an allegation that Elevate, which was not licensed in Washington, DC, and not its partner bank, originated these loans, and was therefore in violation of the state’s usury laws. Pursuant to the Congressional Review Act, Congress and the executive branch have repealed the Office of the Comptroller of the Currency’s (the “OCC”) True Lender Rule, which deemed a national bank that funded a loan or was named as the lender in an agreement the “true lender.” Under the Congressional Review Act, the OCC is barred from promulgating a substantially similar rule. Accordingly, how regulators and courts will apply and interpret laws relevant to the “true lender” issue is unclear. There have been no formal proceedings against us or the Financing Vehicles or indication of any such proceedings to date, but there can be no assurance that the Colorado Administrator or other state regulators will not make assertions similar to those made in its present actions with respect to the obligations facilitated with the assistance of our network in the future. It is also possible that other state agencies or regulators could make similar assertions. If a court, or a state or federal enforcement agency, were to deem us, rather than our Partners, to be the “true lender” for obligations originated by our Partners on our network, and if for this reason (or any other reason) the obligations were deemed subject to and in violation of certain state consumer finance laws, we (or the Financing Vehicles) could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas) and other penalties or consequences, and the obligations could be rendered void or enforceable in whole or in part, any of which could have a material adverse effect on our business (directly, or as a result of adverse impact on our relationships with our Partners, asset investors or other commercial counterparties). If assets originated by our Partners were found to violate the laws of one or more states, whether at origination or after sale by our Partners, assets acquired, directly or indirectly, by the Financing Vehicles may be unenforceable or otherwise impaired, we (or the Financing Vehicles) may be subject to, among other things, fines and penalties, and/or our commercial relationships may suffer, each of which would adversely affect our business and results of operations. When establishing the interest rates and structures (and the amounts and structures of certain fees constituting interest under federal banking law, such as origination fees, late fees and non-sufficient funds fees) that are charged by our Partners on assets originated with the assistance of our AI technology, our Partners (or their bank partners) rely on certain authority under federal law to export the interest rate permitted in the state where each Partner (or its bank partners) is located to their customers in all other states. Further, certain of our Partners and asset investors rely on the ability of subsequent holders to continue charging such rate with such fee structures and enforce other contractual terms agreed to by our Partners (or their bank partners), which are permissible under federal banking laws following the acquisition of the assets. The current annual percentage rates of the assets facilitated with the assistance of our technology network typically range up to 36%. In some states, the interest rates of certain loans exceed the maximum interest rate permitted for consumer loans made by non-bank lenders to customers residing in, or that have nexus to, such states. In addition, the rate structures for assets may not be permissible in all states for non-bank lenders and/ or the amount or structures of certain fees charged in connection with assets may not be permissible in all states for non-bank lenders. Usury, fee and disclosure-related claims involving loans may be brought or raised in multiple ways. Program participants may face litigation, government enforcement or other challenge, for example, based on claims that bank lenders did not establish loan terms that were permissible in the state such participants were located or did not correctly identify the home or host state in which they were located for purposes of interest exportation authority under federal law. Alternatively, we, our non-bank Partners or asset investors may face litigation, government enforcement or other challenge, for example, based on claims that rates and fees were lawful at origination, but that subsequent purchasers were unable to enforce the loan pursuant to its contracted-for terms, or that certain disclosures were not provided at origination because while such disclosures are not required of banks, they may be required of non-bank lenders. Table of Contents 45
In Madden v. Midland Funding, LLC, 786 F.3d 246 (2d Cir. 2015), cert. denied, 136 S. Ct. 2505 (June 27, 2016), for example, the U.S. Court of Appeals for the Second Circuit held that the non-bank purchaser of defaulted credit card debt could not rely on preemption standards under the National Bank Act applicable to the originator of such debt in defense of usury claims. The extent to which other courts will apply the Second Circuit’s Madden decision remains subject to clarification. For example, the Colorado Administrator of the Colorado Uniform Consumer Credit Code (the “UCCC”), reached a settlement with respect to complaints against two online lending platforms, including with respect to the role of partners and sale of assets to investors. The complaints included, among other claims, allegations, grounded in the Second Circuit’s Madden decision, that the rates and fees for certain loans could not be enforced lawfully by non-bank purchasers of bank-originated loans. Under the settlement, these banks and non-Partners committed to, among other things, limit the APR on loans to Colorado consumers to 36% and to take other actions to ensure that the banks were in fact the true lenders. The nonbanks also agreed to obtain and maintain a Colorado lending license. In Colorado, this settlement should provide a helpful model for what constitutes an acceptable Partnership model. However, the settlement may also invite other states to initiate their own actions, and set their own regulatory standards through enforcement. As noted above, federal prudential regulators have also taken actions to address the Madden decision. On May 29, 2020, the OCC issued a final rule reaffirming the “valid when made” doctrine. This ruling affirms that when a national bank or savings association sells, assigns, or otherwise transfers a loan, interest permissible before the transfer continues to be permissible after the transfer. That rule took effect on August 3, 2020. Similarly, the FDIC finalized on June 25, 2020 its 2019 proposal declaring that the interest rate for a loan is determined when the loan is made, and will not be affected by subsequent events. A number of states have filed suits seeking to invalidate these rules on the grounds that the OCC and FDIC exceeded their authority when promulgating those rules. Notably, on February 8, 2022 the District Court for the Northern District of California granted summary judgment in favor of the OCC and FDIC against state claims that the valid when made rules adopted by the FDIC and OCC were invalid; however, future court interpretations of these federal rules are uncertain. There are factual distinctions between our programs and the circumstances addressed in the Second Circuit’s Madden decision, as well as the circumstances in the Colorado Uniform Consumer Credit Code settlement, credit card securitization litigation, and similar cases. As noted above, there are also bases on which the Madden decision’s validity might be subject to challenge or the Madden decision may be addressed by federal regulation or legislation. Nevertheless, there can be no guarantee that a Madden- like claim will not be brought successfully against us or the Financing Vehicles. If a borrower or any state agency were to successfully bring a claim against us, our Partners, a Financing Vehicle, the managers or administrators of such vehicles or asset investors for a state usury law or fee restriction violation and the rate or fee at issue on the loan was impermissible under applicable state law, we, our Partners, Financing Vehicles, administrators or such asset investors may face various commercial and legal repercussions, including that such parties would not receive the total amount of interest expected, and in some cases, may not receive any interest or principal, may hold assets that are void, voidable, rescindable, or otherwise impaired, or may be subject to monetary, injunctive or criminal penalties. Were such repercussions to apply to us, we may suffer direct monetary loss or may be a less attractive candidate for our Partners, Financing Vehicle administrators or asset investors with which to enter into or renew relationships. We may also be subject to payment of damages in situations where we agreed to provide indemnification to our Partners or Financing Vehicles, as well as fines and penalties assessed by state and federal regulatory agencies. The CFPB has at times taken expansive views of its authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new government agency could adversely affect our business, financial condition and results of operations. The CFPB has historically maintained broad authority to create and modify regulations under federal consumer financial protection laws and regulations, such as the Truth in Lending Act and Regulation Z, the Equal Credit Opportunity Act (“ECOA”) and Regulation B, the Fair Credit Reporting Act and Regulation V, the Electronic Funds Transfer Act and Regulation E, among other laws, and to enforce compliance with those laws. The CFPB supervises banks, thrifts and credit unions with assets over $10 billion and examines certain of our Partners. Further, the CFPB is charged with the examination and supervision of certain participants in the consumer financial services market, including payday lenders, private education lenders, and larger participants in other areas of financial services. The CFPB is also authorized to prevent “unfair, deceptive or abusive acts or practices” through its rulemaking, supervisory and enforcement authority. To assist in its enforcement, the CFPB maintains an online complaint system that allows consumers to log complaints with respect to various consumer finance products, including the financial products facilitated with the assistance of our AI technology. This system could inform future CFPB decisions with respect to its regulatory, enforcement or examination focus. The CFPB may also request reports concerning our organization, business conduct, markets and activities and conduct on-site examinations of our business on a periodic basis if the CFPB were to determine, including through its complaint system, that we were engaging in activities that pose risks to consumers. Table of Contents 46
There continues to be uncertainty about the future of the CFPB and as to how its strategies and priorities, including in both its examination and enforcement processes, will impact our business and our results of operations going forward. This uncertainty is increased in light of the fact that the new director of the CFPB has new examination and enforcement priorities. If the CFPB decides to subject us to its supervisory process, it could significantly increase the level of regulatory scrutiny of our business practices. Moreover, the agency has issued several interpretive statements and guidance documents that could impact our business practices including, but not limited to, a May 2022 statement on compliance obligations under ECOA for companies that rely on complex algorithms when making credit decisions. The agency also issued an update to its examination manual that contains a novel interpretation of its authority to prohibit unfair, deceptive, or abusive acts or practices that would authorize the agency to treat any instance of discrimination against a protected class as an unfair act or practice under the Dodd-Frank Act. The CFPB also issued an interpretive rule expanding the authority of states to enforce requirements of federal consumer financial laws including ECOA. Most recently, effective September 30, 2022, the CFPB rescinded availability of no-action letter and compliance assistance sandbox policies for fintechs due to CFPB’s belief that these policies did not advance their stated objective of facilitating consumer-beneficial innovation. Lastly, in December 2022, the CFPB proposed creation of a registration system for nonbanks subject to agency/court orders involving alleged violations of federal, state or local consumer protection laws. In addition, evolving views regarding the use of alternative data variables and machine learning in assessing credit risk could result in the CFPB taking actions that result in requirements to alter or cease offering affected financial products and services, making them less attractive and restricting our ability to offer them. For example, in response to a February 2020 inquiry, three members of the U.S. Senate recommended as part of their findings, that the CFPB further review Upstart’s use of educational variables in its model. The CFPB could also implement rules that restrict our effectiveness in servicing our financial products and services. Although we have committed resources to enhancing our compliance programs, future actions by the CFPB (and/or other regulators) against us, our Partners or our competitors could discourage the use of our services or those of our Partners, which could result in reputational harm, a loss of our Partners, our Partners’ customers or asset investors, or discourage the use of our or their services and adversely affect our business. If the CFPB changes regulations that were adopted in the past by other regulators and transferred to the CFPB by the Dodd-Frank Act, or modifies through supervision or enforcement past regulatory guidance or interprets existing regulations in a different or stricter manner than they have been interpreted in the past by us, the industry or other regulators, our compliance costs and litigation exposure could increase materially. This is particularly true with respect to the application of ECOA and Regulation B to credit risk models that rely upon machine learning and alternative variables, an area of law where regulatory guidance is currently uncertain and still evolving, and for which there are not well-established regulatory norms for establishing compliance. If future regulatory or legislative restrictions or prohibitions are imposed that affect our ability to offer certain of our products or that require us to make significant changes to our business practices, and if we are unable to develop compliant alternatives with acceptable returns, these restrictions or prohibitions could have a material adverse effect on our business. If the CFPB, or another regulator, were to issue a consent decree or other similar order against us, this could also directly or indirectly affect our results of operations. If future regulatory or legislative restrictions or prohibitions are imposed that affect our ability to offer certain of our products or that require us to make significant changes to our business practices, and if we are unable to develop compliant alternatives with acceptable returns, these restrictions or prohibitions could have a material adverse effect on our business. If the CFPB were to pursue an enforcement action against us or one or more of our Partners, this could also directly or indirectly adversely affect our business, financial condition and results of operations. Our compliance and operational costs and litigation exposure could increase if and when the CFPB amends or finalizes any proposed regulations, including the regulations discussed above or if the CFPB or other regulators enact new regulations, change regulations that were previously adopted, modify, through supervision or enforcement, past regulatory guidance, or interpret or enforce existing regulations in a manner different or stricter than have been previously interpreted. We may be subject to regulatory risks related to our operations in Israel. Although we operate and manage significant business activities from our offices in Israel, and source part of the financing for the Financing Vehicles from Israeli asset investors, we do not deliberately target the Israeli consumer market, do not actively promote or market our services or products to Israeli consumers, and do not solicit funding from non-accredited Israeli investors, except with respect to a limited number of non-accredited Israeli investors available under applicable Israeli securities laws. We believe we are not required to hold any specific licenses in Israel and have not applied for any such licenses, since we believe that our activity is either not regulated under Israeli law or performed in reliance on applicable exemptions from the relevant regulation. Nevertheless, in view of the complexity and novelty of our business model and the fact that investment funds activity is not specifically regulated in Israel, uncertainty exists with respect to various regulatory matters, and we are exposed to the risk that an Israeli regulatory authority or agency (including the Israel Securities Authority, the Israel Capital Markets, Insurance and Savings Authority or the Bank of Israel) determines that our conduct is not in compliance with local laws or regulations or Table of Contents 47
requires local licensing, including pursuant to the Israeli Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995, the Joint Investments in Trust Law, 5754-1994, the Law for the Regulation of the Activity of Credit Rating Companies, 5774-2014, the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016, or the Banking (Licensing) Law, 5741-1981. Failure to comply with relevant licensing or other regulatory requirements could lead to reputational damage to us, limit our ability to grow or continue to operate our business in Israel, negatively impact our relationships with Israeli regulators and expose us to the risk of fines, penalties and sanctions. Uncertainty and instability resulting from the ongoing conflict between Russia and Ukraine could adversely affect our business, financial condition and operations. In late February 2022, Russian military forces launched significant military action against Ukraine, and a sustained conflict and disruption in the region has continued through the date of this Annual Report, and is likely to continue in the future. It is not possible to predict the broader or longer-term consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, security conditions, currency exchange rates and financial markets. In response to Russia’s invasion of Ukraine, the United States, the United Kingdom, the European Union and several other countries have imposed or are imposing far-reaching sanctions and export control restrictions on Russian entities and individuals. These and any additional sanctions, as well as any counter responses by the governments of Russia or other jurisdictions, and prolonged unrest, intensified military activities and/or the implementation of more extensive sanctions could adversely affect the global financial markets generally and levels of economic activity as well as increase financial markets volatility. Although we do not have any employees, staff, operations, materials or equipment located in Ukraine, Russia or Belarus, some of our customers, suppliers and Partners may have employees, staff, consultants, operations, materials or equipment located in Ukraine, Russia or Belarus which could adversely affect our business or the services being provided to us. Cybersecurity organizations in many countries have published warnings of increased cybersecurity threats to businesses, and external events, like the conflict between Russia and Ukraine, may increase the likelihood of cybersecurity attacks. We or our customers, suppliers and Partners may be subject to retaliatory cyberattacks perpetrated by Russia or others at its direction in response to economic sanctions and other actions taken against Russia as a result of its invasion of Ukraine. In response to the conflict between Russia and Ukraine, we have blocked all incoming internet traffic from Russia, Ukraine and Belarus, including the ability to log-in to Pagaya systems from such countries (and has provided unique access to one employee of a subcontractor via a dedicated solution). In addition, we are taking additional extensive measures of monitoring any potential abnormal behavior coming from Russia, Ukraine or Belarus that may directly or indirectly affect us. Any failure or security breach of information systems or data could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation or a loss of confidence in our security measures, which could also adversely affect our business. These and other global and regional conditions may adversely affect our business, financial condition and results of operations. Risks Related to Our Operations in Israel Conditions in Israel and relations between Israel and other countries could adversely affect our business, including current uncertainty and instability resulting from the war between Israel and various terrorist organizations, as well as other regional hostilities. We are incorporated under the laws of the State of Israel, and one of our major corporate offices and certain of our facilities, including a significant portion of our research and development are located in Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region directly affect our business and operations and could materially and adversely affect our ability to continue to operate from Israel. Since the State of Israel was established in 1948, a number of armed conflicts have occurred between Israel and its Arab neighbors. Terrorism and violence within Israel or the outbreak of conflicts between Israel and its neighbors, including the Palestinians, Iran, and terrorist organizations operating in the region, may adversely affect our business, operations, or personnel. On October 7, 2023, Hamas, a terrorist organization primarily based in the Gaza Strip, launched a series of attacks on Israel. As a result, on October 8, 2023, Israel officially declared a state of war, leading to a large-scale military response and the call-up of substantial numbers of reservists, including Company employees. While a ceasefire framework took effect in early 2025, regional hostilities involving Hezbollah in Lebanon and the Houthi movement in Yemen have persisted. Most recently, on February 28, 2026, the security situation escalated significantly with the commencement of a major military conflict involving the United States, the State of Israel, and Iran. This situation has led to the declaration of a nationwide state of emergency in Israel, the closure of regional airspace, and retaliatory strikes impacting multiple nations in the Middle East. While we maintain significant research and development activities in Israel, a prolonged Table of Contents 48
mobilization of the regional technical workforce for military service or direct damage to Israeli facilities could disrupt our ability to maintain and enhance our AI technology . Furthermore, the intensity and duration of this active conflict are difficult to predict. These events may be intertwined with wider macroeconomic indicators of a deterioration of Israel’s economic and political standing, or a reduction in global investor appetite for risk assets, which may have an adverse effect on our ability to effectively conduct our business.Although the current conflict in Israel has not materially impacted our business or operations as of the date of this Annual Report, the conflict is rapidly evolving and developing and it is not possible to predict its long-term consequences, which could include further regional instability, geopolitical shifts and adverse effects on trade between Israel and its trading partners, macroeconomic conditions, security conditions and financial markets. Any escalation and expansion of this conflict could have a negative impact on both global and regional conditions and may adversely affect our business, financial condition and results of operations. Additionally, in the event that our facilities are damaged as a result of hostile action or hostilities otherwise disrupt the ongoing operation of our facilities, our ability to continue our operations could be materially adversely affected. Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of property damage and certain direct and indirect damages that are caused by terrorist attacks or acts of war, such coverage would likely be limited, may not be applicable to our business (either due to the geographic location of our offices or the type of business that we operate) and may not reinstate our loss of revenue or economic losses more generally. Furthermore, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages, or whether such coverage would be timely provided. Any losses or damages incurred by us as a result of the conflict in Israel, or any similar conflicts in the future, could have a material adverse effect on our business, financial condition and results of operations. Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies as a result of hostilities in Israel or political instability in the region. In addition, prior to the terrorist attack in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest. These political events and policies, or significant downturn in the economic or financial condition of Israel, could materially and adversely affect our operations and product development. A large concentration of our staff resides in Israel and many of our employees and independent contractors in Israel are required to perform military reserve duty, which may disrupt their work for us. Many of our employees and independent contractors, including certain of our Founders and members of our management team, operate from our office located in Tel-Aviv, Israel. In addition, a number of our officers, including our Founders, and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business and operations. In addition, many of our employees in Israel, including executive officers, may be called upon to perform several days of military reserve duty until they reach the age of 40 (and in some cases, depending on their military duties up to the age of 45 or even 49) and, in emergency circumstances, could be called to immediate and unlimited active duty (subject to approval by the Israeli government). Since the October 7, 2023 attacks on Israel, certain of our employees based in Israel have been called in as reservists at various times and for various periods. On February 28, 2026, a significant military conflict commenced involving the United States, the State of Israel, and Iran, significantly escalating regional hostilities. This situation has led to the declaration of a nationwide state of emergency in Israel, the closure of regional airspace, and retaliatory missile strikes impacting multiple nations in the Middle East. In immediate response, management transitioned all Israel-based employees to a full work-from-home protocol to prioritize their safety and well-being. Although our operations and business have not been materially impacted by these events as of the date of this report, our operations could be disrupted by such call-ups or additional call-ups, and direct damage to our facilities in Tel Aviv could severely disrupt our ability to operate. Such disruption could materially and adversely affect our business, financial condition and results of operations. Your rights and responsibilities as our shareholder will be governed by Israeli law, which differs in some respects from the law governing the rights and responsibilities of shareholders of U.S. and other non-Israeli corporations. Although we are headquartered in New York, we remain incorporated under Israeli law and the rights and responsibilities of our shareholders are governed by Israeli law and the Pagaya Articles as amended from time to time. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders of U.S. and other non-Israeli corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters, such as an amendment to the articles of association, an increase of the company’s authorized share capital, a merger of the company and approval of related Table of Contents 49
party transactions that require shareholder approval. A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholders’ vote or to appoint or prevent the appointment of an office holder in the company has a duty to act in fairness towards the company. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. and other non-Israeli corporations. Provisions of Israeli law and the Pagaya Articles may delay, prevent, or make undesirable an acquisition of all or a significant portion of our shares or assets. Provisions of Israeli law and the Pagaya Articles could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or our shareholders to elect different individuals to the Pagaya Board, even if doing so would be considered to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for Pagaya Ordinary Shares. Among other things: • Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased; • Israeli corporate law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions; • Israeli corporate law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; • the dual class structure of Pagaya Ordinary Shares concentrates voting power with certain of our shareholders—in particular, our Founders; • the Pagaya Articles currently divide our directors into three classes, each of which is elected once every three years (although the Pagaya Board will be fully declassified by our 2026 annual meeting of shareholders); • the Pagaya Articles generally require a vote of a majority of the voting power represented at a general meeting of our shareholders in person or by proxy and voting thereon, as one class (a “simple majority”), and the amendment of a limited number of provisions—such as the provision regarding the size of the Pagaya Board, dividing our directors into three classes, the procedures and the requirements that must be met in order for a shareholder to require us to include a matter on the agenda for a general meeting of our shareholders and the election and removal of members of the Pagaya Board and empowering the Pagaya Board to fill vacancies on the Pagaya Board—require a supermajority vote of the holders of 75% of the total voting power of our shareholders if no Class B Ordinary Shares remain outstanding (or a simple majority so long as any Class B Ordinary Shares remain outstanding); • until the Pagaya Board is fully declassified by our 2026 annual meeting of shareholders, the Pagaya Articles will not permit a director who is elected as a member of one of the three staggered classes to be removed other than in the annual general meeting in which the term of such class expires, except in special circumstances of incapacity or ineligibility (and in the case of other directors, such as those appointed by the Pagaya Board to fill vacancies, do not permit a director to be removed except by a vote of the holders of at least 75% of the total voting power of our shareholders if no Class B Ordinary Shares remain outstanding, or a simple majority so long as any Class B Ordinary Shares remain outstanding); and • the Pagaya Articles provide that director vacancies may be filled by the Pagaya Board. Further, Israeli tax considerations may make potential transactions undesirable to us or some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including, a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. The Pagaya Articles contain a forum selection clause for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to bring claims and proceedings against us, our directors, officers, and other employees and independent contractors. It may be difficult to enforce a U.S. judgment against us or our officers, directors or employees in Israel or the United States, to assert a U.S. securities laws claim in Israel or serve process on our Israeli-based officers, directors and employees. The Pagaya Articles provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act. Except as set forth in the preceding sentence, the Pagaya Articles also provide that, unless we consent in writing to the selection of an alternative forum, the competent courts in Tel-Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a breach of a Table of Contents 50
fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders or (iii) any action asserting a claim arising pursuant to any provision of the Pagaya Articles, the Companies Law or the Israeli Securities Law. This exclusive forum provision is intended to apply to claims arising under Israeli law and would not apply to claims brought pursuant to the Securities Act, the Exchange Act or any other claim for which U.S. federal courts would have exclusive jurisdiction. Such exclusive forum provision in the Pagaya Articles will not relieve us of our duties to comply with U.S. federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of our choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us, our directors, officers and employees. However, the enforceability of similar forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive forum provisions in the Pagaya Articles. Risks Related to Being a Public Company Our management team has limited experience managing a public company. Our management team has limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. As a result, these executives may not successfully or efficiently manage their roles and responsibilities, and we are subject to significant regulatory oversight, reporting obligations under U.S. and international securities laws and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could result in less time being devoted to our management, growth and the achievement of our operational goals. In addition, we may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. Since becoming a public company, we have upgraded our finance and accounting systems and related controls, and we continue to make improvements to build an enterprise system suitable for a public company. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected. We may continue to need to significantly expand our employee and independent contractor base in order to support our operations as a public company, increasing our operating costs. Failure to adequately comply with the requirements of being a public company, could adversely affect our business, financial condition and results of operation. Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to our effectiveness, which could have a significant and adverse effect on our business and reputation. Our current controls and any new controls that we develop may be inadequate because of changes in conditions in our business. Further, weaknesses in our internal controls may be discovered in the future. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended and anticipate that we will continue to expend significant resources, including accounting-related costs, and to provide significant management oversight. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information. We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management devotes substantial time to new compliance initiatives. We have incurred, and will continue to incur, significant legal, accounting, and other expenses that we did not incur as a private company. The costs relate to public company reporting obligations under the Securities Act or the Exchange Act, regulations regarding corporate governance practices, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules of the SEC, the listing requirements of the Nasdaq, and other applicable securities rules and regulations that impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Any changes we make to comply with these obligations may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis, or at all. In addition to the above, compliance with these requirements increase our legal and financial compliance costs. We have made, and will continue to make, changes to our financial management control systems and other areas to manage our obligations as a Table of Contents 51
public company, including corporate governance, corporate controls, disclosure controls and procedures and financial reporting and accounting systems. Implementation of such changes has been costly, time-consuming and, may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. If we fail to develop and maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. We are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") so that our management can certify as to the effectiveness of our internal controls over financial reporting. Likewise, our independent registered public accounting firm is required to provide an attestation report on the effectiveness of our internal control over financial reporting as we ceased to be an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012 (the "JOBS Act"). This attestation report is included herein. The process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404 is costly and it is challenging to complete our evaluation, testing and any required remediation in a timely fashion. Our compliance with Section 404 requires that we incur substantial expenses and expend significant management efforts. We have needed to and may continue to need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404. If we or our accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, it could harm our operating results, adversely affect our reputation, or result in inaccurate financial reporting. Furthermore, should any such deficiencies arise we could be subject to lawsuits, sanctions or investigations by regulatory authorities, including SEC enforcement actions, and we could be required to restate our financial results, any of which would require additional financial and management resources. Concentration of voting power among certain Shareholders, namely our Founders, will limit other shareholders’ ability to influence corporate matters and delay or prevent a third party from acquiring control over us. Our Founders beneficially own, in the aggregate, Ordinary Shares comprising approximately 61.1% of outstanding voting power as of December 31, 2025. This significant concentration of voting power may have a negative impact on the trading price for our Class A Ordinary Shares because investors often perceive disadvantages in owning stock in companies where there is a concentration of ownership in a small number of shareholders. In addition, these shareholders will be able to exercise influence over virtually all matters requiring shareholder approval, including the election of directors and approval of corporate transactions, such as a merger or other sale of us or our assets (except where Israeli law requires special approvals for related party transactions). This concentration of ownership could limit other shareholders’ ability to influence corporate matters and may have the effect of delaying or preventing a change in control, including a merger, consolidation or other business combination, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit the other shareholders. We do not intend to pay cash dividends for the foreseeable future. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends to shareholders in the foreseeable future. Any future determination to pay dividends will be at the discretion of the Pagaya Board and will depend on our financial condition, results of operations, capital requirements, restrictions contained in the Companies Law and in future agreements and financing instruments, business prospects and such other factors as the Pagaya Board deems relevant. As a result, you may not receive any return on an investment in Class A Ordinary Shares unless you sell Class A Ordinary Shares for a price greater than that which you paid for them. If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, our share price and trading volume could decline. The trading market for Class A Ordinary Shares will depend in part on the research and reports that analysts publish about our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade Class A Ordinary Shares or publish inaccurate or unfavorable research about our business, the price of Class A Ordinary Shares may decline. If few analysts cover us, demand for Class A Ordinary Shares could decrease, and the trading volume of Class A Ordinary Shares trading volume may decline. Similar results may occur if one or more of these analysts stop covering us in the future or fail to publish reports on us regularly. Table of Contents 52
Risks Related to Ownership of our Class A Ordinary Shares and Warrants The price of the Class A Ordinary Shares and the price of the public warrants have been and may continue to be volatile. The price of our Class A Ordinary Shares, as well as the price of the public warrants, have been and may continue to be volatile in the future. Our Class A Ordinary Shares and public warrants began trading on Nasdaq on June 23, 2022 and as such have a limited public float and a short trading history to date. From January 1, 2025 to February 27, 2026, the closing price of Class A Ordinary Shares on Nasdaq ranged from as low as $8.54 to as high as $43.81 and daily trading volume ranged from approximately 698,981 to 23,974,110 shares. Broad market fluctuations may adversely affect the trading price of the Class A Ordinary Shares. In particular, a large proportion of the Class A Ordinary Shares have been and may continue to be traded by short sellers which has put and may continue to put pressure on the supply and demand for the Class A Ordinary Shares, further influencing volatility in its market price. In addition, these and other external factors have caused and may continue to cause the market price and demand for the Class A Ordinary Shares to fluctuate substantially, which may limit or prevent our shareholders from readily selling their Class A Ordinary Shares and may otherwise negatively affect the liquidity of the Class A Ordinary Shares. The price of Class A Ordinary Shares and the price of the public warrants may fluctuate due to a variety of factors, including, without limitation: • “short squeezes”; • comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media; • changes in the industries in which we and our Partners operate; • developments involving our competitors; • changes in laws and regulations affecting our business; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • operational impacts resulting from a reduction of workforce; • actions by shareholders, including the sale by PIPE Investors of any of their Class A Ordinary Shares or a sale by shareholders should there be an increase or decrease in the short interest in Class A Ordinary Shares; • additions and departures of key personnel; • commencement of, or involvement in, litigation or regulatory investigations or actions by or against Pagaya; • changes in our capital structure, such as future issuances of equity securities or the incurrence of debt; • the volume of Class A Ordinary Shares available for public sale; and • general economic and political conditions, such as economic recessions or slowdowns, interest rates, unemployment levels, conditions in the housing market, immigration policies, government shutdowns, trade wars and delays in tax refunds, as well as events such as natural disasters, acts of war, terrorism, catastrophes and pandemics. These market and industry factors may materially reduce the market price of Class A Ordinary Shares and public warrants regardless of our operating performance. Any decline in the market price of our Class A Ordinary Shares and public warrants could have a material adverse impact on stockholder confidence and employee retention. Information available in public media that is published by third parties, including blogs, articles, message boards and social and other media, may include statements not attributable to us and may not be reliable or accurate. We have received, and may continue to receive, an increasing degree of media coverage that is published or otherwise disseminated by third parties, including blogs, articles, message boards and social and other media. This includes coverage that is not attributable to statements made by our officers or associates. Information provided by third parties may not be reliable or accurate and could materially impact the trading price of the Class A Ordinary Shares which could result in a substantial decrease in the value of shareholders’ investments. There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq. If we fail to satisfy the continued listing requirements of Nasdaq such as the corporate governance requirements, the minimum share price requirement or the requirement to be timely with our SEC filings, Nasdaq may take steps to delist our securities. Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore Table of Contents 53
compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum share price requirement or prevent future non-compliance with Nasdaq’s listing requirements. Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained. Sales of our securities, or the perception of such sales, by us or holders of our securities in the public market or otherwise could cause the market price for our securities to decline and even in such case certain holders of our securities may still have an incentive to sell our securities, and issuances under additional registration statements would dilute the interest of our shareholders and likely present other risks. The sale of our securities in the public market or otherwise, or the perception that such sales could occur, could harm the prevailing market price of shares of our securities. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell securities in the future at a time and at a price that it deems appropriate. Resales of our securities may cause the market price of our securities to drop significantly, even if our business is doing well. The market price of our Class A Ordinary Shares could decline if holders of our shares sell them, including pursuant to the resale registration statements, or are perceived by the market as intending to sell them. As such, sales of a substantial number of Class A Ordinary Shares in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A Ordinary Shares. Pursuant to registration rights we have with certain holders of our securities, we filed a registration statement, which was declared effective on December 6, 2022, which covers the resale of up to an aggregate of 56,385,664 Class A Ordinary Shares by the selling shareholders named therein and the primary issuance of (1) 798,611 Class A Ordinary Shares issuable upon exercise of the public warrants, (2) 430,555 Class A Ordinary Shares issuable upon exercise of the private placement warrants issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger and (3) 2,612,501 Class A Ordinary Shares issuable upon exercise of other private placement warrants. The number of Class A Ordinary Shares registered for resale under the registration statement exceeds the number of Class A Ordinary Shares constituting our public float and represents approximately 234% of our public float and approximately 72% of outstanding Class A Ordinary Shares (after giving effect to the issuance of Class A Ordinary Shares upon exercise of the public warrants and private placement warrants and the conversion of Class B Ordinary Shares into Class A Ordinary Shares) as of March 31, 2023. In addition, in connection with the acquisition of Darwin, we entered into a registration rights agreement with the Darwin Equityholders whereby we agreed to use our commercially reasonable efforts to file a registration statement to cover the resale of up to 1,530,344 Class A Ordinary Shares issued to Darwin Equityholders, and to use our commercially reasonable efforts to have such registration statement declared effective as soon as is reasonably practicable after the filing thereof. Any of these resales or issuances upon exercise of the Warrants, or the perception in the market that the holders of a large number of shares intend to resell shares, could cause the market price of our securities to decline or increase the volatility in the market price of our securities. In addition, on August 17, 2022, we entered into an ordinary shares purchase agreement (the “Equity Financing Purchase Agreement”) and a registration rights agreement (the “Equity Financing Registration Rights Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley Principal Capital II”). Pursuant to the Equity Financing Purchase Agreement, subject to the satisfaction of the conditions set forth in the Equity Financing Purchase Agreement, we have the right to sell to B. Riley Principal Capital II up to $300 million of our Class A Ordinary Shares, subject to certain limitations and conditions set forth in the Equity Financing Purchase Agreement, from time to time during the 24-month term of the Equity Financing Purchase Agreement. We filed a registration statement, which was declared effective on December 6, 2022, to register the resale of up to 3,344,967 Class A Ordinary Shares, which represent (a) up to 11,633 Class A Ordinary Shares that we issued or may issue to B. Riley Principal Capital II pursuant to the Equity Financing Purchase Agreement in consideration of its commitment to purchase our Class A Ordinary Shares at our election under the Equity Financing Purchase Agreement and (b) 3,333,333 Class A Ordinary Shares we may elect in our sole discretion to issue and sell to B. Riley Principal Capital II under the Equity Financing Purchase Agreement from time to time. Since entering into the Equity Financing Purchase Agreement, we have issued approximately 2.4 million shares. On September 25, 2024, the Company terminated the Equity Financing Purchase Agreement. Given the substantial number of shares available for resale, the sale of shares by such holders, or the perception in the market that holders of a large number of shares intend to sell shares, could increase the volatility of the market price of our Class A Ordinary Shares or result in a significant decline in the public trading price of our Class A Ordinary Shares. On October 4, 2023, we filed a shelf registration statement on Form F-3, which was declared effective on October 16, 2023, to offer and sell up to an aggregate amount of $500,000,000 of Class A Ordinary Shares, or to offer Class A Ordinary Shares upon Table of Contents 54
conversion of debt securities or Class A Ordinary Shares or debt securities upon exercise of warrants, either individually in combination, at prices and on terms described in one or more future supplements to registration statement. On March 13, 2024, the Company priced an offering of 7,500,000 of its Class A Ordinary Shares, no par value, pursuant to an underwriting agreement with Citigroup Global Markets Inc. and Jefferies LLC as representatives of the several underwriters. The proceeds from the offer and sale of the securities are approximately $90.0 million, after deducting the underwriting discount and fees and offering expenses payable by the Company. Any issuances pursuant to the F-3 shelf registration statement could result in substantial dilution to the interests of other holders of our Class A Ordinary Shares or make it more difficult for us to sell equity or equity- related securities in the future at a time and at a price that we might otherwise wish to effect sales. The decision to use the F-3 shelf registration statement will depend on market conditions, the trading prices of our Class A Ordinary Shares and other considerations, and we cannot guarantee the extent to which we may utilize the committed equity financing. We may issue additional Class A Ordinary Shares from time to time, including under our equity incentive plans. Any such issuances would dilute the interest of our shareholders and likely present other risks. We may issue additional Class A Ordinary Shares from time to time, including under our equity incentive plans or as part of an acquisition. Class A Ordinary Shares reserved for future issuance under our equity incentive plans will become eligible for sale in the public market once those shares are issued, subject to provisions relating to time-based and performance-based vesting conditions, lock- up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. We filed a registration statement on Form S-8 under the Securities Act, which became effective on June 21, 2022, to register the issuance of 8,622,441 Class A Ordinary Shares issuable under the Pagaya Technologies, Inc. 2016 Equity Incentive Plan and Stock Option Sub-Plan for United States Persons, 21,625,530 Class A Ordinary Shares issuable under the Pagaya Technologies Ltd. 2021 Equity Incentive Plan and Stock Option Sub-Plan for United States Persons and 9,705,666 Class A Ordinary Shares issuable pursuant to Pagaya Technologies Ltd. 2022 Share Incentive Plan. On September 15, 2023, we filed an additional registration statement on Form S-8 under the Securities Act to register the issuance of 891,858 Class A Ordinary Shares issuable under the Pagaya Technologies Ltd. 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which was approved by the Company’s board of directors and shareholders. In addition, we may amend these registration statements to increase the number of shares issuable thereunder or file one or more registration statements on Form S-8 under the Securities Act to register additional Class A Ordinary Shares or securities convertible into or exchangeable for Class A Ordinary Shares issued pursuant to our equity incentive plans. Any future Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements may be immediately available for sale in the open market. Because our decision to issue additional equity securities or debt securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Class A Ordinary Shares and be dilutive to existing shareholders. In addition, a significant decline in the trading price of our Class A Ordinary Shares could potentially impact our ability to use equity securities as consideration in acquisitions. Our public warrants that were issued and exchanged for EJFA Private Placement Warrants are exercisable for Class A Ordinary Shares, the exercise of which would increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders. Our public warrants to purchase an aggregate of 1,229,166 Class A Ordinary Shares that were issued and exchanged for EJFA Private Placement Warrants became exercisable on July 22, 2022 in accordance with the terms of a warrant agreement (as assigned, assumed and amended, the “Warrant Agreement”) between Continental Stock Transfer & Trust Company, as warrant agent, and EJFA, that was assumed by us pursuant to an assignment, assumption and amendment agreement in connection with the EJFA Merger. Following the 1-for-12 reverse share split effective March 2024, each warrant entitles the holder to purchase 1/12 of a Class A Ordinary Share (or equivalently, 12 warrants are required to obtain 1 Class A Ordinary Share). The exercise price of these warrants is $138 per share, or approximately $169.6 million in the aggregate, assuming none of the warrants are exercised through “cashless” exercise. As long as we have an effective registration statement covering the issuance of the Class A Ordinary Shares issuable upon exercise of the public warrants, the public warrants may only be exercised for cash. To the extent such warrants are exercised, additional Class A Ordinary Shares will be issued, which will result in dilution to the holders of Class A Ordinary Shares and will increase the number of shares eligible for resale in the public market. We believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Class A Ordinary Shares. If the trading price for our Class A Ordinary Shares is less than $138 per share, we believe holders of our public warrants that were issued and exchanged for EJFA Private Placement Warrants will be unlikely to exercise their warrants on a cash basis. On February 27, 2026, the last reported sales price of our Class A Ordinary Shares was $11.19 per share and the last reported sales price of our public warrants was $0.12 per warrant. Sales of substantial Table of Contents 55
numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of our Class A Ordinary Shares. The Warrant Agreement provides that the terms of the public warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or correct any mistake, or adding or changing any other provision as deemed necessary or desirable by the parties but that shall not adversely affect the rights of the warrant holders. However, the Warrant Agreement requires the approval by the holders of at least 50% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then- outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the public warrants, convert the public warrants into cash, shorten the exercise period or decrease the number of Class A Ordinary Shares purchasable upon exercise of a public warrant. The public warrants may never be in the money, and they may expire worthless and the terms of the public warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. The exercise price for our public warrants is $138 per Class A Ordinary Share. We believe the likelihood that warrant holders will exercise their public warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Class A Ordinary Shares. If the trading price for our Class A Ordinary Shares is less than $138 per share, we believe warrant holders will be unlikely to exercise their public warrants. Under certain circumstances, we may redeem unexpired public warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making such public warrants worthless. We have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of Class A Ordinary Shares equals or exceeds $216 per share (as adjusted for share subdivisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the public warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding public warrants could force you to: (i) exercise your public warrants and pay the exercise price therefore at a time when it may be disadvantageous for you to do so; (ii) sell your public warrants at the then-current market price when you might otherwise wish to hold your public warrants; or (iii) accept the nominal redemption price which, at the time the outstanding public warrants are called for redemption, is likely to be substantially less than the market value of your public warrants. In addition, we may redeem public warrants at any time after they become exercisable and prior to their expiration at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their public warrants prior to redemption for a number of Class A Ordinary Shares determined based on the redemption date and the fair market value of our Class A Ordinary Shares. The value received upon exercise of the public warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the public warrants, including because the number of Class A Ordinary Shares received is capped at 0.0301 share of Class A Ordinary Share per warrant (as adjusted for the 1-for-12 reverse share split) irrespective of the remaining life of the warrants. The Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us. The Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the Warrant Agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim. Under the Warrant Agreement, we also agree that we will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Table of Contents 56
Notwithstanding the foregoing, these provisions of the Warrant Agreement do not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of the public warrants will be deemed to have notice of and to have consented to the forum provisions in our Warrant Agreement. If any action, the subject matter of which is within the scope of the forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of the public warrants, such holder will be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder. This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors. Future offerings of debt or equity securities may adversely affect the market price of our Class A Ordinary Shares and our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations. In the future, we may attempt to increase our capital resources by making offerings of debt or additional offerings of equity securities, including senior or subordinated notes and classes of preferred shares by, for example, issuances and sales under the F-3 shelf registration statement, which was declared effective on October 16, 2023, pursuant to which we may offer and sell up to an aggregate amount of $500,000,000 of Class A Ordinary Shares, or to offer Class A Ordinary Shares upon conversion of debt securities or Class A Ordinary Shares or debt securities upon exercise of warrants, either individually in combination, at prices and on terms described in one or more future supplements to registration statement. In addition, on April 14, 2023 we entered into a Preferred Shares Purchase Agreement (the “Preferred Purchase Agreement”) with Oak HC/FT Partners V, L.P., Oak HC/FT Partners V-A, L.P. and Oak HC/FT Partners V-B, L.P (together, “Oak HC/FT”) pursuant to which we agreed to issue and sell to Oak HC/FT an aggregate of 5,000,000 Series A Preferred Shares, no par value (the “Series A Preferred Shares”), at a price of $15 per share (subject to applicable adjustment as provided in the our amended Articles of Association), for an aggregate purchase price of $75 million (the “Preferred Transaction”). In addition, we obtained shareholder approval for certain amended and restated Articles of Association of Pagaya, and the Series A Preferred Shares have the rights and preferences as set forth in our amended and restated Articles of Association. Pursuant to these amended Articles of Association, there are 6,666,666 authorized Series A Preferred Shares and we may issue and sell the balance of the authorized but unissued Series A Preferred Shares from time to time in the future. In September 2025, a total of 2,972,853 Preferred Shares were converted into 2,972,853 Class A Ordinary Shares at the option of the holders. On October 1, 2024, through Pagaya US, issued $160 million aggregate principal amount of 2029 Notes, which are exchangeable for cash, Class A Ordinary Shares, or a combination thereof, at the election of Pagaya US. The exchange rate of the 2029 Notes is 71.4669 Class A Ordinary Shares per $1,000 principal amount of 2029 Notes (equivalent to an initial exchange price of approximately $13.99 per Class A Ordinary Share). Prior to the close of business on the business day immediately preceding July 2, 2029, the 2029 Notes will be exchangeable at the option of the holders only upon the satisfaction of one or more specified conditions. These conditions include, among others, the sale price of the Class A Ordinary Shares exceeding 130% of the initial exchange price for a specified number of trading days, (such condition, the “Sales Price Contingent Exchange Condition”). During the third quarter of 2025, the Sales Price Contingent Exchange Condition was met as the closing sale price of our Class A Ordinary Shares exceeded 130% of the exchange price for the required period and as a result, noteholders have been entitled to exchange their 2029 Notes. As of December 31, 2025, no holders have elected to exchange their Notes. On July 28, 2025, we, through Pagaya US, issued $500 million aggregate principal amount of the 2030 Notes. The indenture governing the 2030 Notes contains financial or other covenants that limit our operational flexibility in a number of other ways, which could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; Table of Contents 57
• limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital. Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness and our cash needs may increase in the future. In addition, our existing credit agreement and the indenture governing the 2030 Notes contain, and future indebtedness that we may incur may contain, financial and other restrictive covenants, as applicable, that limit our ability to operate our business, raise capital or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full. If we decide to issue additional senior securities in the future, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Holders of senior securities may be granted specific rights, including the right to hold a perfected security interest in certain of our assets, the right to accelerate payments due under an indenture, rights to restrict dividend payments, and rights to require approval to sell assets. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences, and privileges more favorable than those of Class A Ordinary Shares and may result in dilution for the owners of our Class A Ordinary Shares. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Upon liquidation, holders of our debt securities and preferred shares, and lenders with respect to other borrowings, will receive a distribution of our available assets prior to the holders of the Class A Ordinary Shares. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of the Class A Ordinary Shares, or both. Any preferred shares we have issued, or will issue in the future, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to make a dividend distribution to the holders of our Class A Ordinary Shares. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings. Thus, holders of our Class A Ordinary Shares bear the risk of our future offerings reducing the market price of Class A Ordinary Shares and diluting their shareholdings in us. There are certain risks associated with the 2029 Notes that we issued in 2024, including the risk that the exchange of the 2029 Notes may dilute the ownership interest of existing shareholders, or may otherwise affect our per share results and depress the price of our Class A Ordinary Shares. In addition, the fundamental change and change of control provisions associated with the 2029 Notes and 2030 Notes, respectively, may delay or prevent an otherwise beneficial takeover attempt of us. The exchange of the 2029 Notes may dilute the ownership interest of existing shareholders, or may otherwise depress the price of our Class A Ordinary Shares. Upon exchange of the 2029 Notes, we have the option to pay or deliver, as the case may be, cash, our Class A Ordinary Shares, or a combination thereof. The exchange of some or all of the 2029 Notes will dilute the ownership interests of existing shareholders to the extent we deliver Class A Ordinary Shares upon exchange of any of the 2029 Notes. Any sales in the public market of the Class A Ordinary Shares issuable upon such exchange could adversely affect prevailing market prices of our Class A Ordinary Shares. In addition, the existence of the 2029 Notes may encourage short selling by market participants that engage in hedging or arbitrage activity, and anticipated exchange of the Notes into our Class A Ordinary Shares could depress the price of our Class A Ordinary Shares. The accounting method for reflecting the 2029 Notes on our balance sheets, accruing interest expense for the 2029 Notes and reflecting the underlying Class A Ordinary Shares in our reported diluted earnings per Class A Ordinary Share may adversely affect our reported earnings and financial condition. In accordance with applicable accounting standards, the 2029 Notes are reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2029 Notes, net of issuance costs and the original issue discount. The issuance costs and the original issue discount are treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the 2029 Notes. As a result of this amortization, the interest expense that we expect to recognize for the 2029 Notes for accounting purposes will be greater than the cash interest payments we will pay on the 2029 Notes, which will result in lower reported income or higher reported loss. Furthermore, if any of the conditions to the exchangeability of the 2029 Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2029 Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders exchange their 2029 Notes and could materially reduce our reported working capital. Table of Contents 58
In addition, the indenture governing the 2029 Notes and the indenture governing the 2030 Notes contain certain provisions that allow holders to require us to purchase all or a portion of their 2029 Notes or 2030 Notes, as applicable, upon the occurrence of certain events described in the indentures. These provisions and the provisions in the indenture governing the 2029 Notes requiring an increase to the exchange rate of the 2029 Notes for exchanges in connection with a make-whole fundamental change may, in certain circumstances, delay or prevent a takeover of us and the removal of incumbent management that might otherwise be beneficial to investors. Our stock typically trades in low volumes daily which could lead to illiquidity, volatility, or depressed stock price. Our stock is listed on Nasdaq, but typically trades in low daily volumes. Because of a history of low trading volume, our stock is relatively illiquid and its price may be volatile. This may make it more difficult for our shareholders to resell shares when desired or at attractive prices. Some investors view low-volume stocks as unduly speculative and therefore not appropriate candidates for investment. Also, due to the low volume of shares traded on any trading day, persons buying or selling in relatively small quantities may easily influence prices of our stock. Risks Related to Tax There can be no assurances that we will not be a passive foreign investment company for any taxable year, which could subject U.S. Holders to significant adverse U.S. federal income tax consequences. If we are or become a PFIC within the meaning of section 1297 of the Code for any taxable year during which a U.S. Holder (as defined in the section titled “U.S. Federal Income Tax Considerations”) holds Class A Ordinary Shares, certain adverse U.S. federal income tax consequences may apply to such U.S. Holder. A non-U.S. corporation will generally be treated as a “passive foreign investment company,” or a PFIC, for U.S. federal income tax purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income (such as interest, dividends, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of assets giving rise to passive income) or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. For these purposes, cash and other assets readily convertible into cash or that do or could generate passive income are categorized as passive assets, and the value of goodwill and other unbooked intangible assets is generally taken into account. Passive income generally includes, among other things, rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities and securities transactions. For purposes of the income and asset tests, we will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. The legislative history of the relevant Code provisions indicates that the total value of a publicly-traded foreign corporation’s assets generally will be treated as equal to the sum of the aggregate value of its outstanding stock plus its liabilities for purposes of the asset test, and publicly-traded foreign corporations often employ such market capitalization method to value their assets. However, the Internal Revenue Service, or the IRS, has not issued guidance conclusively addressing how to value a publicly-traded foreign corporation’s assets for PFIC purposes. The trading value of our Class A ordinary shares has in the past, and is likely to continue to fluctuate. In particular, the market price of the shares of U.S. listed technology companies (including us) has been especially volatile in recent years. In addition, we have a dual class share structure that has the effect of concentrating voting power in our Class B ordinary shares, which are not publicly traded. Our Class A ordinary shares, which are publicly traded, represent less than 20% of the voting power of all our outstanding shares after giving effect to the issuance of Class B ordinary shares upon exercise of stock options held by our Founders. PFIC status is a factual determination that must be made annually after the close of each taxable year. We believe that we were not a PFIC for the taxable year ended December 31, 2025. The trading value of our Class A ordinary shares is likely to continue to fluctuate while the market price of the shares of U.S. listed technology companies continues to be volatile, which may affect the determination of whether we will be considered a PFIC. As our market capitalization and the composition of our income, assets, and operations are subject to change, we cannot assure you that we will not be considered a PFIC for any taxable year. It is possible that the IRS may take a contrary position with respect to our determination in any particular year. Certain adverse U.S. federal income tax consequences could apply to a United States Holder (as defined in Item 9B. “Taxation—U.S. Federal Income Tax Considerations”) if we are treated as a PFIC for any taxable year during which such United States Holder holds our Class A ordinary shares. We are not providing any U.S. tax opinion to any United States Holder concerning our potential PFIC status, and United States Holders should consult their tax advisors about the potential application of the PFIC rules to their investment in our Class A ordinary shares. If we were to be treated as a PFIC, a U.S. Holder of Class A Ordinary Shares may be subject to adverse U.S. federal income tax consequences, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed Table of Contents 59
distributions, interest charges on certain taxes treated as deferred and additional reporting requirements. See “U.S. Federal Income Tax Considerations—Passive foreign investment company considerations” in Item 9B. If we become a controlled foreign corporation for U.S. federal income tax purposes, there could be adverse U.S. federal income tax consequences to certain U.S. shareholders. If a U.S. person is treated as owning (directly, indirectly, or constructively) at least 10 percent of the value or voting power of Class A Ordinary Shares, such person may be treated as a “U.S. shareholder” with respect to each of us and any of our direct and indirect foreign affiliates that is a “controlled foreign corporation” (“CFC”) for U.S. federal income tax purposes. A U.S. shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of “subpart F income,” “global intangible low-taxed income” (for tax years beginning after December 31, 2017 and prior to January 1, 2026) and “net CFC tested income” (for tax years beginning after December 31, 2025), and investments in U.S. property by CFCs, regardless of whether we make any distributions. Individual U.S. shareholders of a CFC are generally not allowed certain tax deductions or foreign tax credits that are allowed to corporate U.S. shareholders. Failure to comply with applicable reporting obligations may subject a U.S. shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurance that we will assist investors in determining whether we or any of our non-U.S. subsidiaries is treated as a CFC, whether any investor is treated as a U.S. shareholder with respect to any such CFC or furnish to any U.S. shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. Each U.S. investor should consult its advisors regarding the potential application of these rules to an investment in Class A Ordinary Shares. We and the Financing Vehicles are subject to tax laws, tariffs and potential tax audits in multiple jurisdictions that could affect our financial results. We and the Financing Vehicles are subject to tax laws, tariffs and potential tax audits in multiple jurisdictions. The application and interpretation of these laws in different jurisdictions affect our international operations in complex ways and are subject to change, and some changes may be retroactively applied. Our tax liabilities in the different countries where we operate depend, in part, on transfer pricing and administrative charges among us and our subsidiaries. These arrangements require us to make judgments with which tax authorities may disagree, potentially resulting in the assessment of material additional taxes, penalties, interest or other charges to resolve these issues. The combination of the above factors may lead to an increased likelihood of tax audits with respect, among other things, to: (i) tax residence, (ii) trade or business activities and/or permanent establishment status in various jurisdictions, (iii) transfer pricing, (iv) CFC legislation, (v) taxation of dividends and capital gains derived upon interests held in companies located in low-tax jurisdictions, (vi) withholding tax application on cross-border payments, and (vii) anti-hybrid mismatches. In any such case, depending on the specific circumstances, tax audits and/or tax litigation with the tax authorities could result in tax liabilities and fines and penalties of significant amounts, which could be in excess of the amounts we provide for in our financial statements for tax liabilities. Transactions, including those with Financing Vehicles, that we have structured in light of current tax rules could have material and adverse consequences for us if tax rules change or if tax authorities apply or interpret the rules differently than we do. Changes in tax laws, their application and interpretation or imposition of any new or increased tariffs, duties and taxes could increase our tax burden, materially and adversely affect our sales, profits and financial condition and have an adverse effect on our business, net assets, or results of operations. Such factors could also cause us to expend significant time and resources and/or cause investors to lose confidence in our reported financial information. Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results. New tax laws, statutes, rules, regulations, or ordinances could be enacted at any time. Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted differently, changed, repealed, or modified at any time. Many of the countries in which we do business have or are expected to adopt changes to tax laws, including tax policy initiatives and reforms relating to the Organization for Economic Co-operation and Development's Base Erosion and Profit Shifting project and specific country anti-avoidance initiatives. Such tax law changes increase uncertainty and may adversely affect our tax provision, possibly with retroactive effect. We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect our financial position and overall or effective tax rates in the future in countries where we have operations, reduce post-tax returns to our shareholders, and increase the complexity, burden and cost of tax compliance. We regularly assesses all of these matters to determine the adequacy of its tax provision, which is subject to significant judgment. Table of Contents 60
On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”)/G20 inclusive framework (the “Inclusive Framework”) on Base Erosion and Profit Shifting published a statement updating and finalizing the key components of a two-pillar plan on global tax reform. The Inclusive Framework plan has now been agreed to by more than 140 OECD members. While many countries have adopted some or all aspects of these rules, some countries have not adopted any or all of them, and many interpretive questions remain that are expected to be addressed in future guidance. In December 2025, Israel enacted Pillar Two legislation to implement a 15% global minimum tax on multinational enterprise groups with consolidated revenues exceeding €750 million in at least two of the four preceding fiscal years, effective from January 1, 2026. We are evaluating the effects of the legislation on our effective tax rate and cash tax position. Risks Related to R&D We depend on highly skilled personnel to enhance our product and grow our business, and if we are unable to hire, integrate and retain our personnel, we may not be able to address competitive challenges and continue our rapid growth. Our future success and ability to maintain effective growth will depend upon our continued ability to hire, integrate and retain highly skilled personnel, including senior management, engineers, designers, developers, product managers, customer care representatives and finance and legal personnel. In addition to hiring and integrating new employees, we must continue to focus on retaining our best employees who foster and promote our innovative corporate culture. In order to remain competitive, we must continue to develop new solutions, applications and enhancements to our existing platform, which requires us to compete with many other companies for software developers with high levels of experience in designing, developing, and managing cloud-based software. Our principal research and development activities are conducted from our offices in Tel Aviv, Israel, and we face significant competition for suitably skilled developers in this region. If we do not continue to innovate and provide a platform, and improved policy model, that is useful to our customers, we may not remain competitive, and our revenue and operating results could suffer. Our success depends on continued innovation to provide features and better performance that will make our platform useful for our partners and investors in our Financing Vehicles, and our ability to persuade existing partners to expand their use of our platform to additional use cases and additional applications. We must continue to invest significant resources in research and development in order to continually improve the speed and power of our platform. We may introduce significant changes to our platform or develop and introduce new and unproven products, including using technologies with which we have little or no prior development or operating experience. If we are unable to continue offering innovative solutions or if new or enhanced solutions fail to engage our partners, we may be unable to attract additional partners or retain our current ones, which may adversely affect our business, operating results, and financial condition. Our future success will depend on our ability to develop the required new technologies or offer new and relevant products and service offerings to our Partners. Our future success will depend on our ability to improve the function, performance and reliability of our solutions and services. The development of new and upgraded solutions and new service offerings, including our future road map solutions to support our as part of new business segments or enhance of existing ones, involves a significant amount of time of our research and development team, as it can take our developers months to update, code and test new and upgraded solutions and integrate them into our platform. Further, our design team spends a significant amount of time and resources in order to incorporate various functionality elements as part of engagement with our partners and their business requirements. We are required to continually gear our solution development efforts towards the needs of different partner segments (Asset class) or per his technology requirement including security related elements. If we are unable to successfully enhance our existing solutions to meet evolving Partner requirements and increase adoption and usage of our solutions, if we are unable to maintain existing solutions provided by us, or if our efforts to increase the usage of our solutions are more expensive than we expect, if our solutions fail to achieve widespread acceptance, our time to market when onboarding new partners can be significantly impacted, driving operation challenges and impact to our business engagement. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Table of Contents 61
Risk management and strategy Our information security program is designed to identify, assess, and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and our customer data (“Information Systems and Data”). Our information security program consists of processes and controls around access control, authorization, auditing, and monitoring, and is supported by our cybersecurity tech ecosystem, all of which is designed to protect our business flows and Information Systems and Data. The information security program is overseen by our Chief Information Security Officer (“CISO”), who manages a team responsible for leading enterprise-wide cybersecurity policy, standards, architecture, and processes. As an organization that has become increasingly interconnected, we have defined a set of cybersecurity principles designed to support the continuous improvement of our overall information security measures, utilizing technology and controls to protect our core assets, infrastructure, Information Systems and Data throughout the entire life cycle of our business. In addition, we are aligned with the SOC 2 Type 2 standard and, since 2019, we have been certified under ISO 27001:2013, ISO 27017:2015 & ISO 27018 (also ISO 42001 certification was achieved this year). Our identification, assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program and identified in the Company’s risk register; (2) the CISO works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; and (3) our Technology Risk Committee evaluates material risks from cybersecurity threats against our overall business objectives and reports to the Risk Committee of our Board of Directors, which evaluates our overall enterprise risk. We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example threat intelligence providers, cybersecurity consultants and software providers, managed cybersecurity service providers, penetration testing service providers, dark web monitoring service providers, and forensic investigators. In addition, our third party risk management program manages cybersecurity risks associated with our use of third-party service providers that perform a variety of functions throughout our business, such as software-as-a-service providers, hosting companies, distributors, and supply chain resources. Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the third-party service provider, our third-party risk management process may involve different levels of assessment designed to help identify associated cybersecurity risks. For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part 1. Item 1A. Risk Factors in this Annual Report on Form 10-K, including “Cyberattacks, security breaches or similar compromise of our information technology systems, or those of third parties upon which we rely, or our data could adversely impact our brand and reputation and our business, operating results and financial condition.” Governance Our cybersecurity governance program is led by our CISO, who has more than 20 years of experience in the cybersecurity field, working for different enterprise organizations, holding multiple patents in the field and has vast knowledge and proven experience in both the technology and risk management domain of cybersecurity. Our CISO is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel. Our CISO is also responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other cybersecurity-related reports. Additionally, our Technology Risk Committee, who reports material risks from cybersecurity threats to the Risk Committee of our Board of Directors, is made up of members of our management team, including our CISO, who hold various certifications and have served in various roles related to risk management, technology and cybersecurity. Our CISO periodically reports risks from cybersecurity threats to our Chief Executive Officer and other senior management members, as well as to our Board of Directors. The Board’s Risk Committee provides oversight of risks from cybersecurity threats, including performing a review of all cybersecurity incidents and risks on a quarterly basis, as well as the processes the Company has implemented to address them. The Risk Committee also has access to various reports, summaries or presentations related to cybersecurity threats, risk, and mitigation. Our cybersecurity incident processes are designed to escalate material cybersecurity incidents to members of our management team depending on the circumstances, who will then work with our incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified, in addition to notifying the Risk Committee, as appropriate. Table of Contents 62
Item 2. Properties Our main offices are in New York, NY (Headquarters) and Tel Aviv, Israel. None of our facilities are owned by Pagaya. We believe that our current facilities are adequate to meet our current needs, and we believe we can acquire suitable additional or alternative space as needed. Item 3. Legal Proceedings Please refer to Note 15. Commitments and Contingencies of the accompanying notes to our consolidated financial statements. From time to time, we may become involved in legal proceedings or be subject to claims arising in the normal course of business. We may also become involved in other judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of our businesses. We are not presently party to any litigation that, if determined adversely to us, we believe would be likely to have a material adverse effect on our business, financial condition, results of operations, or cash flows. Future litigation may be necessary, among other things, to defend ourselves or our Partners in connection with determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights. The results of any litigation cannot be predicted with certainty, particularly in the areas of unsettled and evolving law in which we operate, and an unfavorable resolution in any legal proceedings could materially affect our future business, financial condition, or results of operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosure Not applicable. PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock On June 23, 2022, our Class A Ordinary Shares and public warrants began trading on Nasdaq under the symbols “PGY” and “PGYWW,” respectively. Prior to this, no public market existed for our Ordinary Shares. Holders of Record Based on a review of the information provided to us by our transfer agent, as of December 31, 2025, there were 100 registered holders of our Ordinary Shares, 81 of which were United States registered holders, including Cede & Co., the nominee of The Depository Trust Company, holding approximately 91.8% of our outstanding Ordinary Shares. The number of record holders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident since many of these Ordinary Shares were held by brokers or other nominees. Dividend Policy Pagaya currently expects to retain all future earnings for use in the operation and expansion of its business and does not plan to pay any dividends on Pagaya Ordinary Shares in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the Pagaya Board and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the Pagaya Board considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. The distribution of dividends may also be limited by the Companies Law, which permits the distribution of dividends only out of retained earnings or earnings derived over the two most recent years, whichever is greater, based on audited or reviewed financial statements for a period of up to two years ended no more than six months prior to the date of distribution, provided that there is no reasonable concern that payment of a dividend will prevent a company from satisfying its existing and foreseeable obligations as they become due. Under the Pagaya Articles, dividend distributions may be determined by the Pagaya Board, without the need for shareholder approval. Payment of dividends may be subject to Israeli withholding taxes. See Exhibit 4.9 to this Annual Report for additional information. Table of Contents 63
Performance Graph The following graph shows the cumulative total shareholder return on our Class A ordinary share compared to the cumulative total returns of the Nasdaq Composite index and the Russell 2000 index. The graph tracks the performance of a $100 investment in our Class A ordinary share and in each index (with the reinvestment of all dividends, as applicable) from June 23, 2022 (the date of our Class A ordinary share trading on the Nasdaq stock market) to December 31, 2025. The graph assumes the closing market price on June 23, 2022, of $72.96 per share as the initial value of our Class A ordinary share. The share price performance reflected in the graph represents past performance and should not be considered an indication of future share price performance. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Not applicable. Recent Sales of Unregistered Securities None. Item 6. [Reserved] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with this Annual Report and our consolidated financial statements and the related notes contained elsewhere in this Annual Report. This discussion and analysis may contain forward- looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in “Item 1A.— Risk Factors” of this Annual Report. Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the results of operations for the year ended December 31, 2024 in comparison to the year ended December 31, 2023 have been omitted. For such omitted discussions, refer to Pagaya’s Operating Results included in the Annual Report on Form 10-K filed with the SEC on March 12, 2025. Company Overview Table of Contents 64
Pagaya’s mission is to deliver more financial opportunity to more people, more often. We believe our mission will be accomplished by becoming the trusted lending technology partner for the consumer finance ecosystem, with an expansive product suite (the fee-generating side of our business) fueled by effective and efficient capital and risk management (the capital efficiency side of our business). Both sides of our business working harmoniously to meet the complex needs of the leading financial institutions. We are a product-focused technology company that deploys sophisticated data science and proprietary, AI-powered technology to enable better outcomes for financial institutions, their existing and potential customers, and institutional or sophisticated investors. We have built, and we are continuing to scale, a leading AI and data network for the benefit of financial services and other service providers, their customers, and investors. Services providers integrated in our network, which we refer to as our ‘‘Partners,’’ range from high-growth financial technology companies to incumbent banks and financial institutions. We believe Partners benefit from our network to extend financial products to their customers, in turn helping those customers fulfill their financial needs. These assets originated by Partners with the assistance of Pagaya’s AI technology are eligible to be acquired by Financing Vehicles: (i) funds managed or advised by Pagaya or one of its affiliates, (ii) securitization vehicles sponsored or administered by Pagaya or one of its affiliates and (iii) other similar vehicles (“Financing Vehicles”). In recent years, investments in digitization have improved the front-end delivery of financial products, upgrading customer experience and convenience. Notwithstanding these advances, we believe underlying approaches to the determination of creditworthiness for financial products are often outdated and overly manual. In our experience, providers of financial services tend to utilize a limited number of factors to make decisions, operate with siloed technology infrastructure and have data limited to their own experience. As a result, we believe financial services providers approve a smaller proportion of their application volume than is possible with the benefit of modern technology, such as our AI technology and data network. At our core, we are a technology company that deploys data science and technology to drive better results across the financial ecosystem. We believe our solution drives a “win-win-win” for Partners, their customers and potential customers, and investors. First, by utilizing our network, Partners are able to approve more customer applications, which we believe drives superior revenue growth, enhanced brand affinity, opportunities to promote other financial products and decreased unit-level customer acquisition costs. Partners realize these benefits with limited incremental risk or funding requirements. Second, Partners’ customers benefit from enhanced and more convenient access to financial products. Third, investors benefit through gaining exposure to these assets originated by Partners with the assistance of our AI technology and acquired by the Financing Vehicles through our network. Emerging Growth Company Status On the last business day of the second quarter in 2025, the aggregate market value of the Company’s ordinary Class A shares held by non-affiliate shareholders exceeded $700 million. As a result, we are considered a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act and ceased to be an “emerging growth company” as of December 31, 2025. Due to the loss of emerging growth company status, the Company is no longer exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, and our independent registered public accounting firm evaluated and reported on the effectiveness of our internal controls over financial reporting in this Annual Report. The transition to large accelerated filer status subjects the Company to accelerated filing deadlines and additional disclosure requirements, which further aligns our reporting with other large US companies for even greater transparency. Foreign Private Issuer Status The Company was previously classified as a “foreign private issuer” (“FPI”) under SEC rules; however, as of June 30, 2025, the Company determined that it no longer satisfied the criteria to be an FPI. Consequently, we will be required to comply with all of the provisions applicable to a U.S. domestic issuer under the Exchange Act. There are no material adjustments required as a result of this adjustment since we have decided to voluntarily file on U.S. domestic issuer forms with the SEC beginning in 2024. Since then, the Company has been filing its quarterly reports on Form 10-Q, current reports on Form 8-K, and its annual reports on Form 10-K. In addition, the Company has been complying with Regulation FD and the SEC’s proxy rules, with the exception of the “short-swing” profit recovery provisions of Section 16 of the Exchange Act. Beginning on January 1, 2026, our officers, directors, and principal shareholders are subject to the “short-swing” profit recovery provisions of Section 16 of the Exchange Act with respect to their purchases and sales of the Ordinary Shares. Our Economic Model Table of Contents 65
Pagaya’s revenues are primarily derived from Network Volume. We define Network Volume as the gross dollar value of assets originated by our Partners with the assistance of our artificial intelligence (“AI”) technology1 and, with respect to single-family rental operations, the gross dollar value of services, which may include the value of newly onboarded properties onto our Darwin platform. We generate revenue from network AI fees, contract fees, interest income and investment income. Revenue from fees is comprised of network AI fees and contract fees. Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. We primarily earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume. Capital markets execution and contract fees are primarily earned from investors. Multiple funding channels are utilized to enable the purchase of network assets from our Partners, such as asset backed securitizations and forward flow arrangements. Capital markets execution fees are primarily earned from the market pricing of ABS transactions, as well as upon the execution of forward flow transactions, while contract fees are management, performance and similar fees. Additionally, we earn interest income from our risk retention holdings and our corporate cash balances and investment income associated with our ownership interests in certain Financing Vehicles and other proprietary investments. We incur costs when Network Volume is acquired by the Financing Vehicles. These costs, which we refer to as ‘‘Production Costs,’’ compensate our Partners for acquiring and originating assets. Accordingly, the amount and growth of our Production Costs are highly correlated to Network Volume. An important operating metric to evaluate the success of our economic model, therefore, is FRLPC, or fee revenue less Production Costs. Additionally, we have built what we believe to be a leading data science and AI organization that has enabled us to assist our Partners as they make decisions to extend credit to consumers or for the identification and purchase, or property management, of single-family rental properties. Excluding Production Costs, headcount, technology overhead and research and development expenses represent the significant portion of our expenses. Key Factors Affecting Our Performance Expanded Usage of Our Network by Our Existing Partners Our AI technology typically enables Partners to convert a larger proportion of their application volume into originated loans, enabling them to expand their ecosystem and generate incremental revenues. Our Partners have historically seen rapid scaling of origination volume on our network shortly after onboarding and the contribution of Pagaya’s network to Partners’ total origination volume tends to increase over time. Additionally, we continue to introduce and develop new asset types, products and services, enabling Partners to expand their relationship with Pagaya and further increase origination volumes. Adoption of Our Network by New Partners We devote significant time to, and have a team that focuses on, onboarding and managing Partners to our network. We believe that our success in adding new Partners to our network is driven by our distinctive value proposition: driving significant revenue uplift to our Partners at limited incremental cost or credit risk to the Partner. Our success adding new Partners has contributed to our overall Network Volume growth and driven our ability to rapidly scale new asset classes. Continued Improvements to Our AI Technology We believe our historical growth has been significantly influenced by improvements to our AI technology, which are in turn driven both by the deepening of our proprietary data network and the strengthening of our AI technology. As our existing Partners grow their usage of our network, new Partners join our network, and as we expand our network into new asset classes, the value of our data asset increases. Our technology improvements thus benefit from a flywheel effect that is characteristic of AI technology, in that improvements are derived from a continually increasing base of training data for our technology. We have found, and we expect to continue to experience, that more data leads to more efficient pricing and greater Network Volume. Since inception, we have evaluated more than $3.6 trillion in application volume. Table of Contents 66 1 Our proprietary technology uses machine learning models as a subset of artificial intelligence that go through extensive testing, validation, and governance processes before they can be used or modified. The machine learning models are static and do not have the ability to self-correct, self- improve, and/or learn over time. Any change to the models requires human intervention, testing, validation, and governance approvals before a change can be made.
In addition to the accumulation of data, we make improvements to our technology by leveraging the experience of our research and development specialists. Our research team is central to accelerating the sophistication of our AI technology and expanding into new markets and use cases. We are reliant on these experts’ success in making these improvements to our technology over time. Availability and Pricing of Funding from Investors Regardless of market conditions, the availability and pricing of funding from investors is critical to our growth. We have diversified our investor network and will continue to seek to further diversify our investor base. In the year ended December 31, 2025, our top 5 ABS investors contributed approximately 46% of our total ABS funding, compared to 54% in the year ended December 31, 2024. Performance of Assets Originated with the Assistance of Our Proprietary Technology The availability of funding from investors is a function of demand for consumer credit and residential real estate assets, as well as the performance of such assets originated with the assistance of our AI technology and purchased by Financing Vehicles. Our AI technology and data-driven insights are designed to enable relative outperformance versus the broader market. We believe that investors in Financing Vehicles view our AI technology as an important component in delivering assets that meet their investment criteria. See “Item 1A.—Risk Factors—Risks Related to the Operations of Our Business” in this Annual Report. Impact of Macroeconomic Cycles and Global and Regional Conditions We expect economic cycles to affect our financial performance and related metrics. Macroeconomic conditions, including persistent inflation, elevated interest rates, supply chain constraints, geopolitical tensions, climate-related disruptions, and evolving global conflicts, may affect consumer demand for financial products, our Partners’ ability to generate and convert customer application volume, and the availability and cost of funding from investors through our Financing Vehicles. While geopolitical instability persists in the Middle East and Eastern Europe, these conditions have transitioned into a period of fragile stabilization and market normalization as of early 2026. Following the implementation of a ceasefire framework in the Middle East in late 2025 and the long-term reorientation of global trade routes, the immediate systemic risk to energy prices and supply chains has moderated. However, the ongoing conflict between Israel, the U.S., and Iran that erupted on February 28, 2026, creates significant uncertainty. This escalation could trigger volatility in global energy prices and financial markets, which may increase our cost of capital or diminish investor appetite for risk assets. Management is actively monitoring the situation for systemic risks and has implemented immediate remote-work protocols for our Tel Aviv-based team to maintain business continuity while prioritizing employee safety. We will continue to evaluate our operational protocols as the security landscape evolves. Although these regional dynamics remain a source of uncertainty, we have not experienced material impacts on our business from this conflict, prolonged hostilities or further escalation, such as expanded sanctions, disruptions to energy markets, or broader economic fallout, could exacerbate global inflationary pressures and supply chain challenges. These factors may indirectly influence consumer credit demand, investor appetite for risk assets, and our Network Volume. We assess this risk as manageable but remain vigilant given its potential to contribute to wider economic disruptions. Macroeconomic pressures, including sustained high interest rates and inflation, continue to shape our operating environment. Central banks, including the Federal Reserve, have maintained elevated rates into early 2026 to combat inflationary trends, increasing borrowing costs and potentially straining borrowers’ ability to service debt. This could lead to higher delinquencies, defaults, and charge-offs, Table of Contents 67
reducing investor returns and dampening demand for assets generated on our platform. Inflation, though moderating from its 2022-2023 peak, remains above historical norms, driving up operating costs such as employee compensation, financing expenses, and technology investments. These pressures have been partially offset by operational efficiencies and growth in application volume from our Partners, supporting net growth in Network Volume despite a higher cost of capital. Global supply chain disruptions, exacerbated by geopolitical tensions and extreme weather events linked to climate change, continue to challenge economic stability. These disruptions may indirectly affect our Partners’ ability to serve customers and could increase costs across our network. Meanwhile, the elevated risk-free rate environment has shifted investor preferences, with some favoring safer assets over consumer credit. While our ability to raise funding remains intact, the cost of capital has risen, necessitating adjustments in conversion ratios to meet investor return expectations. Strong Partner application volume has mitigated this impact, sustaining Network Volume growth through 2024 and 2025. Adverse developments in the financial sector, such as regional bank stresses, liquidity concerns, or prolonged U.S. federal debt ceiling debates, could further complicate our operating landscape. In 2024, isolated bank failures and downgrades sparked temporary market volatility, though our direct exposure remains limited. Should these events escalate into systemic liquidity issues, they could impair our Partners’ and counterparties’ ability to meet obligations, disrupt funding flows, or destabilize financial markets, adversely affecting our performance. Similarly, ongoing trade tensions, particularly between the U.S. and China, and potential tariff escalations could introduce additional uncertainty, though we have not yet seen significant effects on our operations. Economic downturns or prolonged uncertainty may pressure the performance of assets acquired by Financing Vehicles from our network. However, these conditions also provide valuable data to refine our AI technology, enhancing our ability to adapt to shifting market dynamics and deliver value to Partners and investors. Historical events like the COVID-19 pandemic and the current inflationary period have underscored the resilience of our platform, validating its outcomes even amid volatility. For a detailed discussion of uncertainties and other factors that could impact our operating results, see the “Item 1A.—Risk Factors” section in this Annual Report. Key Operating Metric We collect and analyze operating and financial data of our business to assess our performance, formulate financial projections and make strategic decisions. In addition to total revenues, net operating income (loss), other measures under U.S. GAAP, and certain non-GAAP financial measures (see discussion and reconciliation herein titled “Reconciliation of Non-GAAP Financial Measures”), we consider Network Volume to be a key operating metric we use to evaluate our business. The following table sets forth our Network Volume for the years ended December 31, 2025, 2024 and 2023. Year Ended December 31, 2025 2024 2023 ($ in millions) Network Volume $ 10,534 $ 9,705 $ 8,299 Network Volume We believe the Network Volume metric to be a helpful indicator for our overall scale and reach, as we generate revenue primarily on the basis of Network Volume. In addition, Network Volume directly influences Fee Revenue Less Production Cost (FRLPC), a key non-GAAP measure we use to assess operational efficiency. While maintaining a focus on profitable growth, which may result in a different targeted volume mix, we believe the growth in Network Volume highlights the scalability of our business, which, in turn, affects our operational leverage and profitability. Network Volume is primarily driven by our relationships with our Partners and SFR Partners. We believe that Network Volume has benefited from continuous improvements to our proprietary technology, enabling our network to more effectively identify assets for acquisition by the Financing Vehicles, thereby providing additional investment opportunities to investors. As a result, when viewed in combination with financial profitability metrics, the expansion of Network Volume provides insights into the effectiveness of our business strategies and the ability to leverage operational efficiencies across different asset classes. Network Volume is comprised of assets across several asset classes, including personal loans, auto loans, residential real estate, and point-of-sale receivables. Components of Results of Operations Revenue We generate revenue from network AI fees, contract fees, interest income and investment income. Network AI fees and contract fees are presented together as Revenue from fees in the consolidated financial statements. Revenue from fees is recognized after applying the five-step model consistent with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Table of Contents 68
606, “Revenue from Contracts with Consumers” (“ASC 606”). Revenue from fees is inclusive of network AI fees and contract fees. Network AI fees. Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. We earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume. Multiple funding channels are used to enable the purchase of network assets from our Partners, such as ABS and forward flow arrangements. Capital markets execution fees are earned when a pre-funded, Pagaya- sponsored ABS vehicle is sold by underwriters, as well as upon the execution of forward flow transactions. Contract fees. Contract fees primarily include administration and management fees, and performance fees. Administration and management fees are contracted upon the establishment of Financing Vehicles and these fees are earned as the Financing Vehicles purchase loans and as the Company provides services over their remaining lives, except for the portion of management fees that are recognized at the point in time based on contract terms. We also earn interest income from our risk retention holdings and cash balances and investment income associated with our ownership interests in certain Financing Vehicles and other proprietary investments. Costs and Operating Expenses Costs and operating expenses consist of Production Costs, technology, data and product development expenses, sales and marketing expenses, and general and administrative expenses. Salaries and personnel-related costs, including benefits, bonuses, share-based compensation, and outsourcing comprise a significant component of several of these expense categories. A portion of our non-share-based compensation expense and, to a lesser extent, certain operating expenses (excluding Production Costs) are denominated in the new Israeli shekel (“NIS”), which could result in variability in our operating expenses which are presented in U.S. Dollars. Production Costs Production Costs are primarily comprised of expenses incurred when Network Volume is transferred from Partners into Financing Vehicles, as our Partners are responsible for marketing and customer interaction and facilitating the flow of additional application flow. Accordingly, the amount and growth of our Production Costs are highly correlated to Network Volume. Additionally, but to a lesser extent, Production Costs also include expenses incurred to renovate single-family rental properties. Technology, Data and Product Development Technology, data and product development expenses primarily comprise costs associated with the maintenance and ongoing development of our network and AI technology, including personnel, allocated costs, and other development-related expenses. Technology, data and product development costs, net of amounts capitalized in accordance with U.S. GAAP, are expensed as incurred. The capitalized internal-use software is amortized on a straight-line method over the estimated useful life in technology, data and product development costs. We have invested and believe continued investments in technology, data and product development are important to achieving our strategic objectives. Sales and Marketing Sales and marketing expenses, related to Partner onboarding, development, and relationship management, as well as capital markets investor engagement and marketing, are comprised primarily of salaries and personnel-related costs, as well as the costs of certain professional services, and allocated overhead. Sales and marketing expenses are expensed as incurred. Sales and marketing expenses in absolute dollars may fluctuate from period to period based on the timing of our investments in our sales and marketing functions. These investments may vary in scope and scale over future periods depending on our pipeline of new Partners and strategic investors. General and Administrative General and administrative expenses primarily comprise personnel-related costs for our executives, finance, legal and other administrative functions, insurance costs, professional fees for external legal, accounting and other professional services and allocated overhead costs. General and administrative expenses are expensed as incurred. Gains and (losses) on investments in loans and securities Table of Contents 69
Gains and (losses) on investments in loans and securities primarily reflects changes in fair value that management identifies as credit losses or reversals of previously recognized credit losses, including remeasurements of instruments accounted for under the fair value option and any gain or loss realized upon sale or termination of such instruments. As of the end of each reporting period, management reviews each security where the fair value is less than the amortized cost to determine whether any portion of the decline in fair value is due to a credit loss and/or whether or not we intend to sell or will be required to sell such security before recovery of its amortized cost basis. The portion of any decline (or recovery) in fair value which management identifies as a credit loss (or a reversal of previously recognized credit loss) is recognized as loss (or gain) on investments in loans and securities. Other Expenses, Net Other expenses, net primarily consists of interest expenses from borrowings, change in the fair value of warrant liabilities and other non-recurring items. Gains and (losses) from extinguishment of debt Gains and (losses) from extinguishment of debt represents the difference between the reacquisition price and the net carrying amount of the retired debt. These amounts include gains from debt repurchases at a discount and losses related to early payment penalties and the write-off of unamortized deferred issuance costs and original issue discounts. Such amounts are recognized in the consolidated statements of operations upon the settlement of the underlying obligations. Income Tax Expense We account for taxes on income in accordance with ASC 740, “Income Taxes” (“ASC 740”). We are eligible for certain tax benefits in Israel under the Law for the Encouragement of Capital Investments or the Investment Law at a reduced tax rate of 12%. Accordingly, as we generate taxable income in Israel, our effective tax rate is expected to be lower than the standard corporate tax rate for Israeli companies, which is 23%. Our taxable income generated in the United States or derived from other sources in Israel which is not eligible for tax benefits will be subject to the regular corporate tax rate in their respective tax jurisdictions. Net Income (Loss) Attributable to Noncontrolling Interests Net income (loss) attributable to noncontrolling interests in our consolidated statements of operations is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net income of these consolidated entities that is not attributable to us. Results of Operations The following table sets forth operating results for the periods indicated (in thousands, except share and per share data): Table of Contents 70
Year Ended December 31, 2025 2024 2023 Revenue Revenue from fees $ 1,261,341 $ 1,004,550 $ 772,814 Other Income Interest income 48,434 32,291 38,748 Investment (loss) income (8,415) (4,593) 489 Total Revenue and Other Income 1,301,360 1,032,248 812,051 Production costs 749,169 597,652 508,944 Technology, data and product development (2) 75,213 76,571 74,383 Sales and marketing (2) 53,591 50,404 49,773 General and administrative (2) 159,560 240,781 203,351 Total Costs and Operating Expenses 1,037,533 965,408 836,451 Operating Income (Loss) 263,827 66,840 (24,400) Gains and (losses) on investments in loans and securities (1) (107,030) (404,150) (131,315) Other expense, net (1) (80,417) (83,612) (25,453) Gains and (losses) from extinguishment of debt (1) (24,755) (200) — Income (Loss) Before Income Taxes 51,625 (421,122) (181,168) Income tax (benefit) expense (19,745) 24,576 15,571 Net Income (Loss) Including Noncontrolling Interests 71,370 (445,698) (196,739) Less: Net (loss) income attributable to noncontrolling interests (10,019) (44,292) (68,301) Net Income (Loss) Attributable to Pagaya Technologies Ltd. $ 81,389 $ (401,406) $ (128,438) Earnings (loss) per share attributable to Pagaya Technologies Ltd. ordinary shareholders: Basic $ 0.99 $ (5.66) $ (2.14) Diluted $ 0.93 $ (5.66) $ (2.14) Weighted average shares outstanding: Basic 78,336,095 70,879,807 60,038,893 Diluted 83,097,227 70,879,807 60,038,893 (1) Prior period amounts have been reclassified to conform to the current period’s presentation. (2) The following table sets forth share-based compensation for the periods indicated below (in thousands): Year Ended December 31, 2025 2024 2023 Technology, data and product development $ 4,965 $ 8,695 $ 12,375 Sales and marketing 21,142 14,666 13,216 General and administrative 28,011 38,136 45,464 Total share-based compensation in operating expenses $ 54,118 $ 61,497 $ 71,055 Comparison of Year Ended December 31, 2025 and 2024 Total Revenue and Other Income Table of Contents 71
Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Revenue from fees $ 1,261,341 $ 1,004,550 $ 256,791 26 % Interest income 48,434 32,291 16,143 50 % Investment (loss) income (8,415) (4,593) (3,822) (83) % Total Revenue and Other Income $ 1,301,360 $ 1,032,248 $ 269,112 26 % Total revenue and other income, increased by $269.1 million, or 26%, to $1,301.4 million for the year ended December 31, 2025 from $1,032.2 million for the year ended December 31, 2024. The increase was primarily driven by an increase in revenue from fees and interest income, partially offset by an increase in investment loss, net. Revenue from fees increased by $256.8 million, or 26%, to $1,261.3 million for the year ended December 31, 2025 from $1,004.6 million for the year ended December 31, 2024. The increase was primarily due to a $215.2 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $916.1 million for the year ended December 31, 2024 to $1,131.3 million for the year ended December 31, 2025. The increase in Network AI fees was primarily driven by improved economics in AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 9% from $9.7 billion for the year ended December 31, 2024 to $10.5 billion for the year ended December 31, 2025. These increases were partially offset by a decrease in capital markets execution fees earned from our ABS and forward flow transactions during the year ended December 31, 2025. Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $41.6 million from $88.5 million for the year ended December 31, 2024 to $130.0 million for the year ended December 31, 2025. This increase was due to higher net asset values of assets held by ABS Financing Vehicles driven by continued business growth, and an increase in performance fees, as the prior period included a reversal of performance fees. Interest income increased by $16.1 million, or 50%, to $48.4 million for the year ended December 31, 2025 from $32.3 million for the year ended December 31, 2024. The increase in interest income was directly related to our risk retention holdings and related securities held in our consolidated VIEs as well as certain risk retention holdings held directly by our consolidated subsidiaries. For further information, see “—Net Income (Loss) Attributable to Noncontrolling Interests.” The increase in interest income was primarily the result of changes in structure and composition of asset portfolio. Investment loss increased by $3.8 million to a loss of $8.4 million for the year ended December 31, 2025, reflecting an impairment recorded on certain proprietary investments. Costs and Operating Expenses Year Ended December 31, 2025 2024 (in thousands) Production costs $ 749,169 $ 597,652 Technology, data and product development 75,213 76,571 Sales and marketing 53,591 50,404 General and administrative 159,560 240,781 Total Costs and Operating Expenses $ 1,037,533 $ 965,408 Production Costs Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Production costs $ 749,169 $ 597,652 $ 151,517 25 % Production costs increased by $151.5 million, or 25%, to $749.2 million for the year ended December 31, 2025 from $597.7 million for the year ended December 31, 2024. This increase was due to an increase in the Network Volume attributable to business growth in addition to the composition of the asset classes that make up our Network Volume. Technology, Data and Product Development Table of Contents 72
Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Technology, data and product development $ 75,213 $ 76,571 $ (1,358) (2) % Technology, data and product development costs for the year ended December 31, 2025 decreased $1.4 million, or 2%, compared to the same period in 2024. This decrease was primarily driven by a $3.7 million decrease in compensation expenses, partially offset by a $1.9 million increase in amortization of intangible assets and a $1.0 million increased in cloud server expenses. During the year ended December 31, 2025 and 2024, we capitalized $16.1 million and $23.0 million of software development costs, respectively. Amortization expense, including impairment charges, for capitalized software development costs was $23.9 million and $26.5 million for the year ended December 31, 2025 and 2024, respectively. Sales and Marketing Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Sales and marketing $ 53,591 $ 50,404 $ 3,187 6 % Sales and marketing costs for the year ended December 31, 2025 increased by $3.2 million compared to the same period in 2024. The increase was primarily driven by a $2.2 million increase in amortization of intangible assets and a $1.4 million increase in compensation expenses, including share-based compensation. General and Administrative Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) General and administrative $ 159,560 $ 240,781 $ (81,221) (34) % General and administrative costs for the year ended December 31, 2025 decreased by $81.2 million, or 34%, compared to the same period in 2024. The decrease was primarily driven by a $32.4 million lower loss from loan purchases, a $28.9 million decrease in transaction costs charged to general and administrative costs, and a $15.8 million decrease in compensation expenses, including share-based compensation. Gains and (Losses) on Investments in Loans and Securities Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Gains and (losses) on investments in loans and securities $ (107,030) $ (404,150) $ 297,120 74 % Losses on investments in loans and securities for the year ended December 31, 2025 decreased $297.1 million compared to the same period in 2024. The decrease was primarily due to a $316.7 million reduction in credit-related impairment loss on certain investments from $412.1 million in the prior period to $95.4 million in the current period, primarily driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value, as well as fair value option gains from ABS resecuritizations at lower interest rates during the current period. Of the credit-related impairment loss of $95.4 million in the current period, $16.7 million is attributable to the noncontrolling interest in certain VIEs and accordingly, is not attributable to Pagaya Shareholders. These improvements were partially offset by a $26.2 million increase in losses (net of gains) from the sale of certain investments in the current period. Other Expenses Net Table of Contents 73
Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Other expenses, net $ (80,417) $ (83,612) $ 3,195 4 % Other expenses, net for the year ended December 31, 2025 decreased by $3.2 million, compared to the same period in 2024. The decrease was primarily due to a favorable impact of $5.9 million from a release of contingent liability associated with the acquisition of Theorem and lower interest expenses of $4.8 million from the issuance of $500 million aggregate principal amount of the 2030 Notes and the use of proceeds therefrom that reduced our cost of capital. These decreases were partially offset by an unfavorable impact of $6.2 million from the change in fair value of a warrant liability. Gains and (Losses) From Extinguishment of Debt Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Gains and (losses) from extinguishment of debt $ (24,755) $ (200) $ (24,555) NM NM: Not Meaningful Loss from extinguishment of debt is $25.5 million one-time loss related to the write-off of deferred issuance costs and the early payment penalty from the repayment of the outstanding principal balance of the term loan and certain secured borrowings using the proceeds from the issuance of the 2030 Notes. This loss was partially offset by a $0.7 million net gain from the repurchase of $6.9 million aggregate principal amount of outstanding 2030 Notes at 87.4% of the principal amount. This gain includes the write-off of associated pro rata unamortized debt issuance costs. Income Tax (Benefit) Expense Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Income tax (benefit) expense $ (19,745) $ 24,576 $ (44,321) (180) % Income tax expense for the year ended December 31, 2025 decreased by $44.3 million, compared to the same period in 2024. The change from income tax expense to benefit was primarily driven by a reduction in uncertain tax positions, a tax benefit recognized for interest expense deduction, and accelerated deduction following the enactment of the new U.S. tax law in the year ended December 31, 2025. Net Loss Attributable to Noncontrolling Interests Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Net loss attributable to noncontrolling interests $ (10,019) $ (44,292) $ 34,273 77 % Net loss attributable to noncontrolling interests in the year ended December 31, 2025 decreased by $34.3 million, or 77%, compared to the same period in 2024. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings. This amount represented the net loss of the consolidated VIEs held by other investors in the VIE for which we had no economic rights. This amount was the result of a lower credit-related impairment loss of $33.3 million on the risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Gains and (losses) on Investments in Loans and Securities.” Reconciliation of Non-GAAP Financial Measures To supplement our consolidated financial statements prepared and presented in accordance with U.S. GAAP, we use the non- GAAP financial measures FRLPC, FRLPC as percentage of Network Volume (FRLPC %), Adjusted Net Income (Loss) and Adjusted EBITDA to provide investors with additional information about our financial performance and to enhance the overall Table of Contents 74
understanding of the results of operations by highlighting the results from ongoing operations and the underlying profitability of our business. We are presenting these non-GAAP financial measures because we believe they provide an additional tool for investors to use in comparing our core financial performance over multiple periods with the performance of other companies. However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by U.S. GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with U.S. GAAP. To address these limitations, we provide a reconciliation of FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable U.S. GAAP measure. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA in conjunction with their respective related U.S. GAAP financial measures. FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA for the years ended December 31, 2025, 2024 and 2023 are summarized below (in thousands): Year Ended December 31, 2025 2024 2023 Fee Revenue Less Production Cost (FRLPC) $ 512,172 $ 406,898 $ 263,870 Fee Revenue Less Production Costs % (FRLPC %) 4.9 % 4.2 % 3.2 % Adjusted Net Income $ 275,318 $ 66,866 $ 16,556 Adjusted EBITDA $ 370,987 $ 210,378 $ 82,022 FRLPC is defined as revenue from fees less production costs. We use FRLPC as part of overall assessment of performance, including the preparation of our annual budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance. The Company is including a reconciliation between FRLPC and operating income, which we consider the most directly comparable GAAP financial measure. FRLPC is designed to assess operational efficiency by measuring fee revenue against production costs, excluding operating expenses not directly tied to revenue production, such as technology development, sales and marketing, and general and administrative costs. FRLPC is intended to highlight the scalability of our platform as Network Volume (the gross dollar amount of assets originated or services rendered using our technology) increases, demonstrating our ability to efficiently generate fee revenue while managing production costs. FRLPC %, defined as FRLPC divided by Network Volume, further illustrates this efficiency, showing how effectively we convert Network Volume into fee revenue relative to production costs as our platform scales. Adjusted Net Income is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions and other one-time expenses. Adjusted EBITDA is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions and other one-time expenses, interest expense, depreciation and amortization expense, and provision (and benefit from) for income taxes. These items are excluded from our Adjusted Net Income and Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items is unpredictable, is not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful. We believe FRLPC, FRLPC %, Adjusted Net Income and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, we have included FRLPC, FRLPC %, Adjusted Net Income and Adjusted EBITDA in this report because these are key measurements used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting. However, this non- Table of Contents 75
GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with U.S. GAAP and may be different from similarly titled non- GAAP financial measures used by other companies. The following tables present a reconciliation of FRLPC to Operating Income, and Adjusted EBITDA to Net Income Attributable to Pagaya Technologies, Ltd., in each case the most directly comparable U.S. GAAP measures ($ in thousands, unless otherwise noted): Year Ended December 31, 2025 2024 2023 Operating Income (Loss) $ 263,827 $ 66,840 $ (24,400) Add: Technology, data and product development 75,213 76,571 74,383 Add: Sales and marketing 53,591 50,404 49,773 Add: General and administrative 159,560 240,781 203,351 Less: Interest income 48,434 32,291 38,748 Less: Investment (loss) income (8,415) (4,593) 489 Fee Revenue Less Production Costs (FRLPC) $ 512,172 $ 406,898 $ 263,870 Network Volume (in millions) $ 10,534 $ 9,705 $ 8,299 Fee Revenue Less Production Costs % (FRLPC %) 4.9 % 4.2 % 3.2 % Year Ended December 31, 2025 2024 2023 Net Income (Loss) Attributable to Pagaya Technologies Ltd. $ 81,389 $ (401,406) $ (128,438) Adjusted to exclude the following: Share-based compensation 54,118 61,497 71,055 Fair value adjustment to contingent liability (5,907) — — Fair value adjustment to warrant liability 3,830 (2,349) 1,842 Impairment loss on certain investments, net 98,321 394,484 52,381 Write-off of capitalized software and other assets 4,920 3,245 1,938 Restructuring expenses 1,392 3,583 5,450 Transaction-related expenses 23 2,095 6,153 Non-recurring expenses (1) 37,232 5,717 6,175 Adjusted Net Income $ 275,318 $ 66,866 $ 16,556 Adjusted to exclude the following: Interest expenses 85,337 90,183 30,740 Income tax (benefit) expense (19,745) 24,576 15,571 Depreciation and amortization 30,077 28,753 19,155 Adjusted EBITDA $ 370,987 $ 210,378 $ 82,022 (1) 2025 amount includes a loss of $24.8 million from extinguishment of debt. Liquidity and Capital Resources As of December 31, 2025 and December 31, 2024, the principal sources of liquidity were cash and cash equivalents, and restricted cash and cash equivalents of $288.3 million and $226.5 million, respectively. Our primary requirements for liquidity and capital resources are to purchase and finance risk retention requirements, invest in technology, data and product development and to attract, recruit and retain a strong employee base, as well as to fund potential strategic transactions, including acquisitions, if any. We intend to continue to make strategic investments to support our business plans. We do not have capital expenditure commitments as the vast majority of our capital expenditures relate to the capitalization of certain compensation and non-compensation expenditures used in the development and improvement of our proprietary technology. Table of Contents 76
There are numerous risks to the Company’s financial results, liquidity and capital raising, some of which may not be quantified in the Company’s current estimates. The principal factors that could impact liquidity and capital needs are a prolonged inability to adequately access funding in the capital markets or in bilateral agreements, including as a result of macroeconomic conditions such as rising interest rates and higher cost of capital, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced products and the continuing market adoption of the Company’s network. We expect to fund our operations with existing cash and cash equivalents, cash generated from operations, including cash flows from investments in loans and securities, and additional secured borrowings, including repurchase agreements. We may also raise additional capital, including through borrowings under the credit facility (see further description of the credit facility below in the section titled “2025 Revolving Credit Facility”) or through the sale or issuance of equity or debt securities, as described below in the sections titled “Shelf Registration Statement” and “Senior Note,” as well as the issuance of up to an additional 1,666,666 Series A Preferred Shares. The ownership interest of our shareholders will be, or could be, diluted as a result of sales or issuances of equity or debt securities, and the terms of any such securities may include liquidation or other preferences that adversely affect the rights of our shareholders of Class A Ordinary Shares. We intend to support our liquidity and capital position by pursuing diversified sources of financing, including debt financing, secured borrowings, or equity financing. The rates, terms, covenants and availability of such additional financing is not guaranteed and will be dependent on not only macro-economic factors, but also on Pagaya-specific factors such as the results of our operations and the returns generated by loans originated with the assistance of our AI Technology. Additional debt financing, such as secured or unsecured borrowings, including repurchase agreements, credit facilities or corporate bonds, and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in “Item 1A.— Risk Factors” in this Annual Report. In addition, we will receive the proceeds from any exercise of any public warrants in cash. Each public warrant that was issued and exchanged for each EJFA Private Placement Warrant in the EJFA Merger entitles the holder thereof to purchase one Class A Ordinary Share at a price of $138 per share (as adjusted for the 1-for-12 reverse share split). Following the 1-for-12 reverse share split effective March 2024, each warrant entitles the holder to purchase 1/12 of a Class A Ordinary Share (or equivalently, 12 warrants are required to obtain 1 Class A Ordinary Share). The aggregate amount of proceeds could be up to $169.6 million if all such warrants are exercised for cash. We expect to use any such proceeds for general corporate and working capital purposes, which would increase our liquidity. As of February 27, 2026, the price of our Class A Ordinary Shares was $11.19 per share. We believe the likelihood that warrant holders will exercise their public warrants that were issued in the EJFA Merger, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of Class A Ordinary Shares. If the market price for our Class A Ordinary Shares is less than $138 per share, we believe warrant holders will be unlikely to exercise on a cash basis their public warrants that were issued in the EJFA Merger. To the extent the public warrants are exercised by warrant holders, ownership interest of our shareholders will be diluted as a result of such issuances. Moreover, the resale of Class A Ordinary Shares issuable upon the exercise of such warrants, or the perception of such sales, may cause the market price of our Class A Ordinary Shares to decline and impact our ability to raise additional financing on favorable terms. See “Item 1A.—Risk Factors” in this Annual Report. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing related to such acquisitions or investments. In the event that we pursue additional financing, we may not be able to raise such financing on terms acceptable to us or at all. Additionally, as a result of any of these actions, we may be subject to restrictions and covenants in the agreements governing these transactions that may place limitations on us and we may be required to pledge collateral as security. If we are unable to raise additional capital or generate cash flows necessary to expand operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition. It is also possible that the actual outcome of one or more of our plans could be materially different than expected or that one or more of the significant judgments or estimates could prove to be materially incorrect. Securitizations In connection with asset-backed securitizations, we sponsor and establish securitization vehicles to purchase loans originated by our Partners. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of Table of Contents 77
loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. To comply with risk retention regulatory requirements, we retain at least 5% of the credit risk of the securities issued by securitization vehicles (“Risk Retention”). In addition to these mandatory holdings, we may hold other interests in our securitization vehicles (“Additional Investments”). Additional Investments consist of interests acquired on a discretionary basis, as well as interests previously classified as Risk Retention for which the regulatory holding requirements have expired. We may purchase these Additional Investments to facilitate the execution of specific securitization transactions, or for investment purposes where we believe the risk-adjusted return is attractive. We may also sell Additional Investments when we view the market opportunity as attractive. The following table presents the carrying value (fair value) of our investments in loans and securities as of December 31, 2025 and 2024 distinguishing between our Risk Retention and Additional Investments (in thousands): December 31, December 31, 2025 2024 Risk Retention Notes $ 99,640 $ 27,829 Certificates 404,618 386,930 Total Risk Retention $ 504,258 $ 414,759 Additional Investments Notes $ 308,551 $ 212,444 Certificates 127,882 146,313 Loans 4,578 4,893 Total Additional Investments $ 441,011 $ 363,650 Total Investments in Loans and Securities $ 945,269 $ 778,409 As of December 31, 2025, our Total Risk Retention represented approximately 53% of our total investments in loans and securities. Our Additional Investments totaled $441.0 million at fair value, increased by $77.4 million compared to December 31, 2024. In the ordinary course of business, we enter into certain financing arrangements to finance our investments in loans and securities, including both our Risk Retention and Additional Investments. From time to time, the Company makes cash deposits that serve to collateralize guarantees for related transactions, included in restricted cash and cash equivalents on the consolidated balance sheets. For further information, see Note 5 and Note 8 to our consolidated financial statements included elsewhere in this Annual Report. Shelf Registration Statement On October 4, 2023, we filed a shelf registration statement on Form F-3 (the “Shelf Registration”) with the SEC that was declared effective on October 16, 2023. Under this Shelf Registration, we may, from time to time, offer and sell in one or more offerings Class A Ordinary Shares, various series of debt securities and/or warrants to purchase any of such securities, either individually or in combination with any of these securities, up to $500 million. Cash Flows The following table presents summarized consolidated cash flow information for the periods presented (in thousands): Table of Contents 78
Year Ended December 31, 2025 2024 2023 Net cash provided by (used in) operating activities $ 238,620 $ 47,751 $ (21,659) Net cash used in investing activities $ (309,710) $ (479,876) $ (381,457) Net cash provided by financing activities $ 129,601 $ 436,688 $ 289,096 Operating Activities Our primary uses of cash in operating activities are for ordinary course of business, with the primary use related to employee and personnel-related expenses. As of December 31, 2025, we had 518 employees (242 in the U.S and 276 in Israel), compared to 553 employees (286 in the U.S. and 267 in Israel) on December 31, 2024. During the first and second quarters of 2024, we reduced our headcount by over 20% across our Israel and U.S. offices. This reduction in workforce enabled us to streamline our operations resulting in cost savings. Net cash provided by operating activities for the year ended December 31, 2025 was $238.6 million, an increase of $190.9 million from net cash provided by operating activities of $47.8 million for the year ended December 31, 2024. This reflects our net income including noncontrolling interests of $71.4 million, adjusted for non-cash charges of $240.5 million and net cash outflows of $73.3 million from changes in our operating assets net of operating liabilities. Non-cash charges primarily consisted of (1) impairment losses on investments in loans and securities, which decreased by $299.2 million driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value, of which $16.7 million is not attributable to Pagaya, but rather attributable to the VIEs noncontrolling interests, (2) share-based compensation, which decreased by $7.4 million, (3) depreciation and amortization, which increased by $1.3 million primarily from capitalized software, (4) fair value adjustment to warrant liability, which increased by $6.2 million driven by changes in the market price of our Class A Ordinary Shares, and (5) loss from extinguishment of debt of $17.9 million associated with the repayment of term loan. Our net cash flows resulting from changes in operating assets and liabilities decreased by $54.6 million to net cash outflows of $73.3 million for the year ended December 31, 2025 compared to net cash outflows $18.7 million for the same period in 2024. Investing Activities Our primary uses of cash in investing activities are the purchase of risk retention assets of sponsored securitization vehicles and investments in equity method and other investments. For the year ended December 31, 2025, net cash used in investing activities totaled $309.7 million, primarily driven by purchases of risk retention assets. These purchases of risk retention assets amounted to $632.2 million, a decrease of $61.8 million compared to the prior period, driven by diversified funding channels, including asset-backed securitization, pass-through and forward flow transactions, in the current period. This cash outflow was partially offset by proceeds received from existing risk retention assets, which totaled $352.2 million, an increase of $105.7 million compared to the prior period. Financing Activities For the year ended December 31, 2025, net cash provided by financing activities of $129.6 million was primarily attributable to $500.0 million of proceeds from the issuance of the 2030 Notes and $356.0 million of proceeds from secured borrowing, partially offset by $353.7 million and $341.4 million of repayments made to term loan and secured borrowing, respectively, and $25.8 million of distributions made to noncontrolling interests. Indebtedness 2025 Revolving Credit Facility On October 1, 2025, the Company refinanced the Revolving Credit Facility by way of terminating Credit Agreement and entering into a new three-year revolving credit facility (the “2025 Revolving Credit Facility”) with a syndicate of financial institutions. The 2025 Revolving Credit Facility provides a committed borrowing capacity of $132 million. Borrowings under the 2025 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to 1.00% floor) plus a margin of 2.50% and (ii) an adjusted term SOFR (subject to 1.00% floor) plus a margin of 3.50%, a reduction from the prior revolving credit facility’s rate of SOFR plus 7.50%. A commitment fee accrues on Table of Contents 79
any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions. Senior Notes On July 28, 2025, the Company, through Pagaya US Holding Company LLC (“Pagaya US”), a wholly-owned subsidiary of the Company, issued $500 million aggregate principal amount of 8.875% Senior Unsecured Notes due 2030 (the “2030 Notes”). The 2030 Notes will accrue interest at a rate of per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2026. The 2030 Notes will mature on August 1, 2030, unless earlier repurchased or redeemed. The 2030 Notes will be fully and unconditionally guaranteed, on a senior unsecured basis, by the Company and each of the Company’s subsidiaries (other than Pagaya US) that is a guarantor under its existing credit agreement (collectively, the “Guarantors”). The 2030 Notes and the related note guarantees will be senior unsecured obligations of Pagaya US and the Guarantors. The 2030 Notes will be redeemable at the option of Pagaya US. At any time prior to August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the 2030 Notes plus a make-whole premium described in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. On and after August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at the redemption prices set forth in the 2030 Notes Indenture. In addition, at any time prior to August 1, 2027, Pagaya US may, from time to time, redeem up to 40% of the aggregate principal amount of the 2030 Notes with an amount of cash not greater than the net cash proceeds from certain equity offerings at the redemption price set forth in the 2030 Notes Indenture, if not less than 50% of the aggregate principal amount of the 2030 Notes remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering. On July 28, 2025, the Company fully repaid $332.1 million of outstanding principal of its term loan under the Credit Agreement, using the net proceeds from the issuance of the 2030 Notes. Additionally, subsequent to the issuance of the 2030 Notes, the Company repaid $184.4 million of secured borrowing as of December 31, 2025. These repayments reflect the Company’s ongoing strategy to optimize its capital structure by reducing higher-cost debt and extending debt maturities. As a result of these transactions, the Company recognized a loss of $24.8 million, related to the write-off of unamortized deferred issuance costs and an early payment penalty associated with the term loan. This loss is reflected in “Gains and (losses) from extinguishment of debt” in the consolidated statements of operations. In December 2025, the Company repurchased $6.9 million aggregate principal amount of the outstanding 2030 Notes at a price equal to 87.4% of the principal amount. The Company paid total consideration of $6.0 million, excluding accrued interest, resulting in a $0.7 million net gain on extinguishment of debt. This gain is net of the written-off carrying value, which included associated pro rata unamortized debt issuance costs, is reported within “Gains and (losses) from extinguishment of debt” in the consolidated statements of operations. Following the repurchase, the remaining aggregate principal amount of the 2030 Notes outstanding was $493.1 million as of December 31, 2025. In February 2026, the Company repurchased $7.4 million aggregate principal amount of the outstanding 2030 Notes at a price equal to 87.3% of the principal amount. The Company paid total consideration of $6.5 million, excluding accrued interest, resulting in a $0.8 million gain on extinguishment of debt. This gain is net of the written-off carrying value. Following the repurchase, the remaining aggregate principal amount of the 2030 Notes outstanding was $485.7 million. Receivables Facility In April 2025, Pagaya Structured Products LLC, a wholly-owned subsidiary of the Company, entered into a Loan and Security Agreement (the “LSA Agreement”) with certain lenders. This agreement established a 24-months Capitalized Interest Amounts Facility (the “CIA Facility”) with a maximum principal amount of $24 million to finance eligible capitalized interest amounts related to sponsored securitization transactions. Additionally, in June 2025, Pagaya Structured Products LLC entered into a 30- month Accrued Loan Purchasing Fee Receivables Facility (the “ALPF Facility”) with a maximum principal amount of $65 million to finance certain eligible receivables from sponsored securitization transactions. Borrowings under the CIA Facility bear interest at a rate per annum equal to the adjusted term Secured Overnight Financing Rate (“SOFR”) (subject to a 1.00% floor) plus a margin of 4.00%, while borrowings under the ALPF Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 1.9%. As of December 31, 2025, the combined outstanding principal Table of Contents 80
balance under the CIA Facility and ALPF Facility was $86.6 million, which is recorded within secured borrowing on the consolidated balance sheets. In June 2025, Pagaya Receivables LLC, a wholly-owned subsidiary of the Company, repaid the outstanding balance of a 3-year loan facility (the “SVB Receivables Facility) and terminated the related LSA Agreement, which was originally executed in October 2022. Borrowings under the SVB Receivables Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 0.00% floor) plus a margin of 3.50%. As of December 31, 2024, the outstanding principal balance under the SVB Receivable Facility was $31.8 million, which is recorded within secured borrowing on the consolidated balance sheets. Exchangeable Notes On October 1, 2024, Pagaya US issued $160 million in aggregate principal amount of 6.125% exchangeable notes due 2029 (the “2029 Notes”). The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers. The 2029 Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025, and mature on October 1, 2029, unless earlier repurchased, redeemed, or exchanged. The 2029 Notes are exchangeable for cash, Class A Ordinary Shares of the Company, or a combination of both, at the Company’s discretion, subject to certain conditions. The 2029 Notes are senior, unsecured obligations of Pagaya US and are fully and unconditionally guaranteed on a senior, unsecured basis by the Company. The 2029 Notes rank equally in right of payment with other senior, unsecured indebtedness and are structurally subordinated to all existing and future liabilities of Pagaya US’s subsidiaries. The initial exchange rate of the 2029 Notes is 71.4669 Class A Ordinary Shares per $1,000 principal amount of 2029 Notes (which is equivalent to an initial exchange price of approximately $13.99 per share). The exchange rate will be subject to adjustment upon the occurrence of certain events. In addition, upon the occurrence of a “make-whole fundamental change” (as defined in the indenture governing the 2029 Notes (“the 2029 Notes Indenture”)) or if Pagaya US redeems the 2029 Notes, Pagaya US will, in certain circumstances, increase the exchange rate by a number of additional Class A Ordinary Shares for a holder who elects to convert its 2029 Notes in connection with such make-whole fundamental change or to convert its 2029 Notes called for redemption during the related redemption exchange period. Prior to the close of business on the business day immediately preceding July 2, 2029, the 2029 Notes will be exchangeable at the option of the holders only upon the satisfaction of one or more specified conditions. These conditions include, among others, the sale price of the Class A Ordinary Shares exceeding 130% of the initial exchange price for a specified number of trading days. On or after July 2, 2029 until the close of business on the second scheduled trading day immediately preceding October 1, 2029, the 2029 Notes will be exchangeable at the option of the holders at any time regardless of the specified conditions. The 2029 Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the option of Pagaya US at any time, and from time to time, on or after October 5, 2027 and on or before the 41st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the 2029 Notes are “Freely Tradable” (as defined in the 2029 Notes Indenture), and all accrued and unpaid additional interest, if any, has been paid in full as of the first interest payment date occurring on or before the related “Redemption Notice Date” (as defined in the 2029 Notes Indenture); and (ii) the last reported sale price per Class A Ordinary Share exceeds 130% of the exchange price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the related redemption notice date; and (2) the trading day immediately before the Redemption Notice Date. However, the Company may not redeem less than all of the outstanding 2029 Notes unless at least $50.0 million aggregate principal amount of 2029 Notes are outstanding and not called for redemption as of the related Redemption Notice Date. In addition, calling any 2029 Note for redemption will constitute a make-whole fundamental change with respect to such 2029 Note called for redemption, in which case the exchange rate applicable to the exchange of such 2029 Note called for redemption will be increased in certain circumstances if it is exchanged during the related “Redemption Exchange Period” (as defined in the 2029 Notes Indenture). If a “Fundamental Change” (as defined in the 2029 Notes Indenture) of the Company occurs, then, subject to a limited exception, noteholders may require Pagaya US to repurchase their 2029 Notes for cash. The repurchase price will be equal to the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. Table of Contents 81
Credit Agreement On February 2, 2024, the Company entered into a certain Credit Agreement (the “Credit Agreement”) which provides for a 5- year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million, which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million. Borrowings under the Facilities bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to a 2.00% floor) plus a margin of 6.50% or (ii) an adjusted term Secured Overnight Financing Rate (subject to a 1.00% floor) plus a margin of 7.50%. In November 2024, the Company amended the Credit Agreement to increase the Term Loan Facility by $100 million, bringing the total principal amount to $355 million. The Company also increased an aggregate principal amount of the Revolving Credit Facility of $15 million, bringing the total principal amount of the Revolving Credit Facility to $50 million. In February 2025, the Company further increased the aggregate principal amount of the Revolving Credit Facility by $8 million, resulting in a total principal amount of the Revolving Credit Facility of $58 million. On July 28, 2025, the Company fully paid off the outstanding principal balance of its term loan of $332.1 million using the proceeds from the issuance of the 2030 Notes, as discussed above. As a result of this transaction and the repayment of outstanding balance under the Credit Agreement, the Company has incurred a loss of $23.9 million during the year ended December 31, 2025, related to the write-off of deferred issuance costs and an early payment penalty, reported within “Gains and (losses) from extinguishment of debt” in the consolidated statements of operations. Contractual Obligations, Commitments and Contingencies During the normal course of business, we enter into certain lease contracts with lease terms through 2032. As of December 31, 2025, the total remaining contractual obligations are approximately $42.2 million, of which $10.1 million is for the next 12 months. From time to time, the Company enters into a purchase commitment with our third-party cloud computing web services provider. As of December 31, 2025, the total remaining contractual obligations from this purchase commitment are approximately $10.7 million, of which $6.3 million is for the next 12 months. We may pay more than the minimum purchase commitment based on usage. See Note 15 for details regarding when these obligations are due. In the ordinary course of business, the Company may provide indemnifications or loss guarantees of varying scope and terms to customers and other third parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. For our forward flow agreements, loans purchased have a contractual performance requirement which is measured at every reporting period for a specified time period as provided for in the agreement. If the loan pool’s performance is below the contractual requirement, the counterparty may have first loss up until a contractual agreed limit. If the loans’ performance is below the counterparty’s first loss limit or if there is no first loss limit, then Pagaya would be required to make a payment to the counterparty such that the loans purchased would have achieved the contractual performance requirement. There is a contractual maximum loss for Pagaya’s loss protection with the counterparty taking full risk of loss beyond Pagaya’s loss protection. Our guarantee of contractual loss protection for the buyer meets the accounting definition of a derivative, and therefore we recognize, at inception and each reporting period, a liability for the fair value of the estimated loss protection payments, if any. As of December 31, 2025, there have been no known events or circumstances that have resulted in a material indemnification liability and the Company did not incur material costs to defend lawsuits or settle claims related to these indemnifications. For certain contracts meeting the definition of a guarantee or a derivative, the guarantor must recognize, at inception, a liability for the fair value of the obligation undertaken in issuing the guarantee. In addition, the guarantor must disclose the maximum potential amount of future payments that the guarantor could be required to make under the guarantee, if there were a default by the guaranteed parties. The determination of the maximum potential future payments is based on the notional amount of the guarantees without consideration of possible recoveries under recourse provisions or from collateral held or pledged. As of December 31, 2025, the unfunded maximum potential amount of undiscounted future payments the Company could be required to make under these guarantees totaled $120.2 million. Additionally, in accordance with the guarantee contracts, the Company is required to fund segregated cash balances to provide protection in the event the Company is not able to meet its contractual commitments. As of December 31, 2025, $46.0 million has been segregated and recognized within restricted cash and cash Table of Contents 82
equivalents, of which $12.9 million has been accrued within accrued expenses and other liabilities in the consolidated balance sheets in accordance with these contractual requirements. For a discussion of our debt obligations and operating lease obligations as of December 31, 2025, see Note 8 and Note 14, respectively, to our consolidated financial statements included elsewhere in this Annual Report. Off-Balance Sheet Arrangements In the ordinary course of business, we engage in activities with unconsolidated VIEs, including our sponsored securitization vehicles, which we contractually administer. To comply with risk retention regulatory requirements, we retain at least 5% of the credit risk of the securities issued by sponsored securitization vehicles. From time to time, we may, but are not obligated to, purchase assets from the Financing Vehicles. Such purchases could expose us to loss. For additional information, refer to Note 6 to the consolidated financial statements elsewhere included in this Annual Report. Critical Accounting Estimates The preparation of our consolidated financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to our financial results and the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because the information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate and (2) changes in the estimate could have a material impact on our financial condition or results of operations. For further information, see Note 2 to our audited consolidated financial statements in this Annual Report on Form 10-K. It should be noted that future events rarely develop exactly as forecasted, and estimates require regular review and adjustment. Fair Value Investments in loans and securities, which include whole loans and notes and residual interests in securitizations, are measured at fair value on a recurring basis. The estimate of fair value of these financial assets requires significant judgment. We use a discounted cash flow model to estimate the fair value of these financial assets based on the present value of estimated future cash flows. The cash flow model uses both observable and unobservable inputs and reflects our best estimates of the assumptions a market participant would use to calculate fair value of the particular financial asset. Primary inputs that require significant judgment include discount rates, net credit loss expectations, expected prepayment rates and consideration of any optional redemption features in our investment securities. As it relates to net credit loss expectations, the most significant unobservable input, management considers a variety of factors including, but not limited to, historical loss trends, origination or vintage analysis, known and inherent risks in the portfolio, recovery rates and current economic conditions. We also take into consideration certain qualitative factors, in which we adjust our quantitative baseline using our best judgment to consider the inherent uncertainty regarding future economic conditions and consumer loan performance. Additionally, we determine whether an impairment has resulted from a credit loss or other factors. We determine whether a credit loss exists by considering information about the collectability of the instrument, current market conditions, and reasonable and supportable forecasts of economic conditions. We recognize the credit loss portion through earnings in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The underlying assumptions, estimates, and assessments we use to provide for fair value are assessed and updated quarterly, as necessary, to reflect our view of current conditions, which can result in changes to the fair value of investments in loans and securities. It is possible that we will experience material differences in the fair value of investments in loans and securities. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in market prices. Our market risk exposure primarily relates to fluctuations in credit Table of Contents 83
risk. We are exposed to market risk directly through investments in loans and securities held on our consolidated balance sheets and access to the securitization markets. Credit Risk Credit risk refers to the risk of loss arising from individual borrower default due to inability or unwillingness to meet their financial obligations. The performance of certain financial instruments, including investments in loans, securitization notes and residual certificates on our consolidated balance sheets, is dependent on the credit performance. To manage this risk, we monitor borrower payment performance and utilize our proprietary, AI-powered technology to evaluate individual loans in a manner that we believe is reflective of the credit risk. The fair values of these loans, securitization notes, and residual certificates are estimated based on a discounted cash flow model which involves the use of significant unobservable inputs and assumptions, the most significant of which is expected credit losses. Accordingly, these instruments are sensitive to changes in credit risk. As of December 31, 2025 and 2024, we were exposed to credit risk on $945 million and $764 million, respectively, of investments in loans and securities held on our consolidated balance sheets, with $871 million and $659 million, respectively, representing net exposure exclusive of non- controlling interests. We have a portfolio risk monitoring process that includes internal monitoring as well as competitor / market assessments, macro-economic trends, and associated stress testing. Loans and related risk retention securities are monitored throughout the entire lifecycle. This risk monitoring framework provides timely and actionable feedback on managing credit risk exposures. The following table summarizes the potential effect that changes in estimates would have on the fair value of our investments in loans and securities as of December 31, 2025 given a hypothetical change in significant unobservable inputs (in millions): Change in Fair Value Basis point change scenario December 31, 2025 Credit loss rate increase of 100 basis point $ (112.8) Credit loss rate decrease of 100 basis point $ 131.3 These scenarios illustrate a hypothetical, instantaneous shift in the value of our investments in loans and securities and do not represent management's performance expectations. As of December 31, 2025, our portfolio is comprised of 43% notes and 56% certificates. Of the current portfolio, 42% was originated in 2025, 39% in 2024 and 19% in 2023 and prior. We would normally expect more seasoned vintages and more senior investments to be less impacted by changes in credit loss rates. To manage this risk, management integrates these sensitivities into our continuous portfolio monitoring and stress-testing framework, ensuring our operations and capital structure remains resilient to such fluctuations. We are also exposed to credit risk in the event of non-performance by the financial institutions holding our cash or providing access to our credit line. We maintain our cash deposits in highly-rated financial institutions. In the United States, the majority of our cash deposits are held at federally insured accounts. We manage this risk by maintaining our cash deposits at well- established, well-capitalized financial institutions and diversifying our counterparties. Discount Rate Risk The discount rate risk refers to the risk of loss of future earnings, values or future cash flows that may results from change in market discount rates. The fair values of loans, securitization notes, and residual certificates are estimated based on a discounted cash flow model, where the discount rate represents an estimate of the required rate of return by market participants. The changes in the discount rates reflect the expected returns of similar financial instruments available in the market and can be caused by changes in the interest rates. The following table summarizes the potential effect that changes in estimates would have on the fair value of our investments in loans and securities as of December 31, 2025 given a hypothetical change in significant unobservable inputs (in millions): Change in Fair Value Basis point change scenario December 31, 2025 Discount rate increase of 100 basis point $ (7.2) Discount rate decrease of 100 basis point $ 5.2 Table of Contents 84
These scenarios illustrate potential market shifts rather than internal forecasts. While changes in market discount rates— reflecting the required rate of return for market participants—can influence the estimated fair value of our loans and securitization notes and certificates, management incorporates these hypothetical fluctuations into our proactive capital allocation and deal execution strategies. This modeling ensures we maintain operational stability and consistent access to funding across varying market conditions. Interest Rate Risk The interest rates charged on the loans originated by Partners are subject to change by the platform sellers, originators, and/or servicers. Higher interest rates could negatively impact collections on the underlying loans, leading to increased delinquencies, defaults, and our borrower bankruptcies, all of which could have a substantial adverse effect on our business. This would also impact future loans and securitizations. Additionally, we maintain certain financing sources with varying degrees of interest rate sensitivities, including floating-rate interest payments on Pagaya’s credit facilities. Accordingly, trends in the prevailing interest rate environment can influence interest expense/payments and harm the results of our operations. For additional information, see “Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” We also rely on securitization transactions, with notes of those transactions typically bearing a fixed coupon. For future securitization issuances, higher interest rates could effect overall deal economics as well as the returns we would generate on our related risk retention investments. Foreign Exchange Risk Foreign currency exchange rates do not pose a material market risk exposure. However, given the compensation and non- compensation expenses denominated in Israeli Shekel, our inability or failure to manage foreign exchange risk could harm our business, financial condition, or results of operations. Item 8. Financial Statements and Supplementary Data The audited consolidated financial statements as required under Item 8 are attached hereto starting on page F-1 of this Annual Report. The audit report of Kost Forer Gabbay & Kasierer, a member of EY Global, an independent registered public accounting firm, is included within the attached audited consolidated financial statements. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Disclosure Controls and Procedures We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. In order to evaluate the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, management has conducted an assessment, Table of Contents 85
including testing, of the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and overseen by our Board of Directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP) and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, no matter how well designed and operated, can only provide reasonable, not absolute assurance, that its objectives will be met. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate but such improvements will be subject to the same inherent limitations outlined in this section. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. Based on that assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025. Our independent registered accounting firm, Kost Forer Gabbay & Kasierer, a member of EY Global, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, as stated in their attestation report, which is included herein. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Table of Contents 86
Item 9B. Other Information Company Trading Plans or Other Arrangements Subject to compliance with U.S. and Israel securities laws, rules and regulations, our directors and executive officers have adopted, and may adopt, individual share trading plans in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (a “Rule 10b5-1 Plan”), in which they will contract with a broker to buy or sell our Class A Ordinary Shares on a periodic basis. Under a Rule 10b5-1 Plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from the director or officer. The director or officer may amend or terminate the plan in some circumstances. Our directors and executive officers may buy or sell additional shares outside of a Rule 10b5-1 Plan when they are not in possession of material, non-public information. Director and Officer Trading Arrangements Our directors and officers (as defined in Exchange Act Rule 16a-1(f)) may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5– 1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended December 31, 2025, one officer or director entered into 10b5-1 trading arrangements. On December 16, 2025, Tami Rosen, a director and Chief Development Officer of the Company, entered into a new 10b5-1 Plan, with an end date of July 31, 2026, to sell a maximum aggregate of 40,000 shares. Taxation U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of U.S. federal income tax considerations of the ownership and disposition of our Class A Ordinary Shares. This discussion is based on the Code, Treasury Regulations, published positions of the IRS, court decisions and other applicable authorities, all as of the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). This discussion applies only to Class A Ordinary Shares that are held as capital assets within the meaning of the Code (generally, property held for investment). The following does not purport to be a complete analysis of all potential U.S. federal income tax effects arising in connection with the ownership and disposition of Class A Ordinary Shares. Pagaya has not sought and will not seek any rulings from the IRS regarding any matter discussed herein. There can be no assurance that the IRS will not assert, or that a court will not sustain, a position contrary to any of those set forth below. This discussion does not discuss all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular circumstances or status including: • our officers or directors; • banks, insurance companies, and other financial institutions; • tax-exempt entities or governmental organizations; • tax-qualified retirement plans; • regulated investment companies and real estate investment trusts; • brokers, dealers, or traders in securities that elect to use a mark-to-market method of accounting; • persons that elect to mark their securities to market; • certain expatriates and former citizens or residents of the United States; • persons that have a functional currency other than the U.S. Dollar; • persons holding Class A Ordinary Shares as part of a hedging, integrated, straddle, conversion or constructive sale transaction for U.S. federal income tax purposes; • S corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes (and investors therein); • persons that actually or constructively own 5% or more of our shares by vote or value; and • persons that acquired Class A Ordinary Shares pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation or in connection with services. This discussion does not address estate or gift taxes, the alternative minimum tax provisions of the Code, special tax accounting rules under Section 451(b) of the Code, or any state, local or non-U.S. tax considerations or any tax considerations other than U.S. federal income tax considerations. For purposes of this discussion, a “U.S. Holder” is any beneficial owner of Class A Ordinary Shares that is, for U.S. federal income tax purposes: • an individual who is a citizen or resident of the United States; Table of Contents 87
• a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia; • an estate whose income is subject to U.S. federal income taxation regardless of its source; or • a trust if (i) a court within the U.S. is able to exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions, or (ii) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership (including any entity or arrangement treated as a partnership or other pass-through entity for U.S. federal income tax purposes) holds Class A Ordinary Shares, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership and certain determinations made at the owner or participant level. Accordingly, partners and partnerships considering an investment in Class A Ordinary Shares should consult their tax advisors regarding the U.S. federal income tax considerations to them of an investment in Class A Ordinary Shares. THE U.S. FEDERAL INCOME TAX TREATMENT OF THE OWNERSHIP AND DISPOSITION OF CLASS A ORDINARY SHARES TO ANY PARTICULAR HOLDER WILL DEPEND ON THE HOLDER’S PARTICULAR TAX CIRCUMSTANCES. EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE OWNERSHIP AND DISPOSITION OF CLASS A ORDINARY SHARES, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX LAWS. Taxation of dividends and other distributions on Class A Ordinary Shares Distributions of cash or other property to a U.S. Holder with respect to such U.S. Holder’s Class A Ordinary Shares generally will be treated as dividends for U.S. federal income tax purposes to the extent paid out of Pagaya’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of such earnings and profits generally will be applied against and reduce the U.S. Holder’s basis in its Class A Ordinary Shares (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such Class A Ordinary Shares. Because Pagaya does not intend to determine its earnings and profits under U.S. federal income tax principles, distributions made by Pagaya generally will be reported as dividends. In the case of corporate U.S. Holders, such dividends generally will be subject to tax at regular U.S. graduated income tax rates and will not be eligible for the dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. In the case of non-corporate U.S. Holders, such dividends generally will be subject to tax at preferential long-term capital gains rates only if (i) Class A Ordinary Shares are readily tradable on an established securities market in the United States or (ii) Pagaya is eligible for the benefits of the income tax treaty between the United States and Israel (the “Treaty”), in each case, provided that Pagaya is not treated as a PFIC at the time the dividend was paid or in the previous year and certain other requirements are met. U.S. Holders should consult their tax advisors regarding the availability of the lower rate for any dividends paid with respect to Class A Ordinary Shares. Subject to certain exceptions, dividends on Class A Ordinary Shares generally will be treated as non-U.S. source income and generally will constitute “passive category” income for U.S. foreign tax credit limitation purposes. As described under “Certain Material Israeli Tax Considerations,” a U.S. Holder may be subject to Israeli withholding taxes on such dividends. Subject to certain conditions and limitations, a Treaty-eligible U.S. Holder may be eligible to claim a foreign tax credit in respect of any Israeli income taxes paid or withheld with respect to dividends on Class A Ordinary Shares to the extent such taxes are nonrefundable under the Treaty. Under current Treasury Regulations, which apply to foreign taxes paid or accrued in taxable years beginning on or after December 28, 2021 a U.S. Holder may in some circumstances be prohibited from claiming a foreign tax credit with respect to certain non-U.S. taxes that are not creditable under applicable income tax treaties. Instead of claiming a credit for non-U.S. taxes, a U.S. Holder may elect to deduct such taxes in computing its taxable income for U.S. federal income tax purposes, provided that such U.S. Holder does not elect to claim a foreign tax credit for any non-U.S. income taxes paid or accrued for the relevant taxable year. The rules governing foreign tax credits and the deductibility of foreign taxes are complex. All U.S. Holders, whether or not they are Treaty-eligible, should consult their tax advisors regarding the availability of foreign tax credits and the deductibility of foreign taxes in light of their particular circumstances. Disposition of Class A Ordinary Shares Upon a sale, exchange, or other taxable disposition of Class A Ordinary Shares, a U.S. Holder generally will recognize capital gain or loss. The amount of gain or loss recognized generally will be equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition and (ii) the U.S. Holder’s adjusted tax basis in its Class A Ordinary Shares sold or exchanged in such disposition. Any gain or loss recognized by a U.S. Holder on the disposition of Class A Ordinary Shares generally will be capital gain or loss and will generally be long-term capital gain or loss if, at the time of the disposition, the U.S. Holder’s holding period in its Class A Ordinary Shares exceeds one year. Long-term capital gains of individuals and certain other non-corporate U.S. Holders are eligible for reduced rates of taxation. The deductibility of capital losses is subject to certain limitations. Table of Contents 88
Any gain or loss realized by a U.S. Holder on the disposition of Class A Ordinary Shares generally will be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. As a consequence, Israeli taxes (including withholding taxes), if any, imposed on any such gain may not be creditable against the U.S. Holder’s U.S. federal income tax liability under the U.S. foreign tax credit limitations of the Code. U.S. Holders that are eligible for the benefits of the Treaty may apply the Treaty to treat such gain as Israeli source, however. Notwithstanding this, pursuant to recently issued Treasury Regulations, it is possible that Treaty-eligible U.S. Holders that do not apply the Treaty and U.S. Holders that are not eligible for benefits under the Treaty may not be able to claim a foreign tax credit for any Israeli taxes imposed on a disposition of Class A Ordinary Shares. The rules regarding foreign tax credits and the deductibility of foreign taxes are complex. All U.S. Holders, whether or not they are Treaty-eligible, should consult their tax advisors regarding the availability of foreign tax credits and the deductibility of foreign taxes in light of their particular circumstances. Passive foreign investment company considerations Definition of a PFIC A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes if either (i) at least 75% of its gross income in a taxable year is passive income (the “income test”) or (ii) at least 50% of its assets in a taxable year (generally determined based on fair market value and averaged quarterly over the year) produce or are held for the production of passive income (the “asset test”). For this purpose, a corporation generally is treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, at least 25% (by value) of the stock. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of certain passive assets. For purposes of these rules, interest income earned by a corporation is considered to be passive income and cash held by a corporation is considered to be a passive asset (other than a limited amount of cash held for short-term working capital needs). PFIC status of Pagaya The legislative history of the relevant Code provisions indicates that the total value of a publicly-traded foreign corporation’s assets generally will be treated as equal to the sum of the aggregate value of its outstanding stock plus its liabilities for purposes of the asset test, and publicly-traded foreign corporations often employ such market capitalization method to value their assets. PFIC status is a factual determination that must be made annually after the close of each taxable year. We believe that we were not a PFIC for the taxable year ended December 31, 2025. The trading value of our Class A ordinary shares is likely to continue to fluctuate while the market price of the shares of U.S. listed technology companies continues to be volatile, which may affect the determination of whether we will be considered a PFIC. As our market capitalization and the composition of our income, assets, and operations are subject to change, we cannot assure you that we will not be considered a PFIC for any taxable year. It is possible that the IRS may take a contrary position with respect to our determination in any particular year. Certain adverse U.S. federal income tax consequences could apply to a United States Holder if we are treated as a PFIC for any taxable year during which such United States Holder holds our Class A ordinary shares. Under the PFIC rules, if we were considered a PFIC at any time that a United States Holder holds our Class A ordinary shares, we would continue to be treated as a PFIC with respect to such holder’s investment unless (i) we cease to be a PFIC, and (ii) the United States Holder has made a “deemed sale” election under the PFIC rules. Application of PFIC rules to Class A Ordinary Shares If (i) Pagaya is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder and (ii) the U.S. Holder did not make a timely and effective QEF Election (as defined below) for Pagaya’s first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) Class A Ordinary Shares (such taxable year as it relates to each U.S. Holder, the “First PFIC Holding Year”) or a Mark-to-Market Election (as defined below), then such holder generally will be subject to special rules (the “Default PFIC Regime”) with respect to: • any gain recognized by the U.S. Holder on the sale or other disposition of its Class A Ordinary Shares; and • any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of Class A Ordinary Shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for such Class A Ordinary Shares). Under the Default PFIC Regime: • the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for its Class A Ordinary Shares; • the amount of gain allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of the first taxable year in which Pagaya is a PFIC, will be subject to tax as ordinary income; Table of Contents 89
• the amount of gain allocated to other taxable years (or portions thereof) of the U.S. Holder included in such U.S. Holder’s holding period will be subject to tax at the highest tax rate in effect for that year and applicable to the U.S. Holder; and • an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder in respect of the tax attributable to each such other taxable year of such U.S. Holder included in such U.S. Holder’s holding period. QEF Election and Mark-to-Market Election In general, if Pagaya is determined to be a PFIC, a U.S. Holder may avoid the Default PFIC Regime with respect to its Class A Ordinary Shares by making a timely and effective “qualified electing fund” election under Section 1295 of the Code (a “QEF Election”) for such holder’s First PFIC Holding Year. In order to comply with the requirements of a QEF Election with respect to Class A Ordinary Shares, a U.S. Holder must receive certain information from Pagaya. Because Pagaya does not intend to provide such information, however, the QEF Election will not be available to U.S. Holders with respect to Class A Ordinary Shares. Alternatively, if a U.S. Holder, at the close of its taxable year, owns (or is deemed to own) shares in a PFIC that are treated as marketable shares, the U.S. Holder may make a mark-to-market election (a “Mark-to-Market Election”) with respect to such shares for such taxable year. A U.S. Holder that makes a valid Mark-to-Market Election for such holder’s First PFIC Holding Year generally will not be subject to the Default PFIC Regime with respect to its Class A Ordinary Shares as long as such shares continue to be treated as marketable shares. Instead, the U.S. Holder generally will include as ordinary income for each year that Pagaya is treated as a PFIC, the excess, if any, of the fair market value of its Class A Ordinary Shares at the end of its taxable year over the adjusted basis in its Class A Ordinary Shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its Class A Ordinary Shares over the fair market value of its Class A Ordinary Shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election). The U.S. Holder’s basis in its Class A Ordinary Shares will be adjusted to reflect any such income or loss amounts, and any additional gain recognized on a sale or other taxable disposition of the Class A Ordinary Shares in a taxable year in which Pagaya is treated as a PFIC will be treated as ordinary income. Special tax rules may also apply if a U.S. Holder makes a Mark-to-Market Election for a taxable year after such holder’s First PFIC Holding Year. The Mark-to-Market Election is available only for stock that is regularly traded on a national securities exchange that is registered with the SEC, including Nasdaq. U.S. Holders should consult their tax advisors regarding the availability and tax considerations relevant to a Mark-to-Market Election with respect to Class A Ordinary Shares in their particular circumstances. If Pagaya is determined to be a PFIC and, at any time, has a non-U.S. subsidiary that is classified as a PFIC, U.S. Holders generally will be deemed to own a portion of the shares of such lower-tier PFIC, and could incur liability for the deferred tax and interest charge described above if Pagaya receives a distribution from, or disposes of all or part of Pagaya’s interest in, the lower- tier PFIC or the U.S. Holders otherwise were deemed to have disposed of an interest in the lower-tier PFIC. A Mark-to-Market Election generally will not be available with respect to such lower-tier PFIC. U.S. Holders should consult their tax advisors regarding the tax considerations relevant to the deemed ownership of lower-tier PFICs. A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may be required to file an IRS Form 8621 with such U.S. Holder’s U.S. federal income tax return (whether or not a QEF Election or a Mark-to- Market Election is made) and provide such other information as may be required by the U.S. Treasury Department. The rules governing PFICs and QEF Elections and Mark-to-Market Elections are complex and their application is affected by various factors in addition to those described above. Accordingly, U.S. Holders of Class A Ordinary Shares should consult their tax advisors concerning the application of the PFIC rules to Class A Ordinary Shares in their particular circumstances. THE PFIC RULES ARE COMPLEX AND THEIR APPLICATION IS AFFECTED BY VARIOUS FACTORS IN ADDITION TO THOSE DESCRIBED ABOVE. ALL U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE PFIC RULES TO THEM, INCLUDING WITH RESPECT TO WHETHER A QEF ELECTION (OR A QEF ELECTION ALONG WITH A PURGING ELECTION), A MARK-TO- MARKET ELECTION OR ANY OTHER ELECTION IS AVAILABLE AND THE CONSIDERATIONS RELEVANT TO THEM OF ANY SUCH ELECTION, AND THE IMPACT OF ANY PROPOSED OR FINAL PFIC TREASURY REGULATIONS. CERTAIN MATERIAL ISRAELI TAX CONSIDERATIONS The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of the Class A Ordinary Shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction. Israeli tax considerations Table of Contents 90
The following is a brief summary of certain material Israeli income tax laws applicable to Pagaya, and certain Israeli Government programs that may benefit Pagaya. This section also contains a discussion of certain material Israeli tax consequences concerning the ownership and disposition of Class A Ordinary Shares purchased by investors. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel, trusts or traders in securities who are subject to special tax regimes not covered in this discussion. To the extent that the discussion is based on new tax legislation that has not yet been subject to judicial or administrative interpretation, Pagaya cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below is not intended, and should not be construed, as legal or professional tax advice and is not exhaustive of all possible tax considerations. The discussion is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which amendments or changes could affect the tax consequences described below. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CLASS A ORDINARY SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY NON-U.S., STATE OR LOCAL TAXES. General corporate tax structure in Israel Israeli companies are generally subject to corporate tax on their taxable income. The corporate tax rate is currently 23%, which has been the rate since 2018. However, the effective tax rate payable by a company that derives income from a Preferred Enterprise or a Technological Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli company are generally subject to taxation at the corporate tax rate. Law for the Encouragement of Industry (Taxes), 5729-1969 The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the “Industry Encouragement Law”, provides several tax benefits for “Industrial Companies.” We believe that we currently qualify as an Industrial Company within the meaning of the Industry Encouragement Law. The Industry Encouragement Law defines an “Industrial Company” as an Israeli resident company that derives 90% or more of its income in any tax year, other than income from certain government loans, from an “Industrial Enterprise” owned by it and located in Israel or in the “Area,” in accordance with the definition under Section 3A of the ITO. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production. The following are the principal tax benefits available to Industrial Companies: • amortization of the cost of purchased patents, rights to use a patent, and know-how, which were purchased in good faith and are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised; • under limited conditions, an election to file consolidated tax returns with controlled Israeli Industrial Companies; and • expenses related to a public offering are deductible in equal amounts over three years commencing with the year of the offering. Eligibility for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority. Tax benefits and grants for research and development Israeli tax law allows, under certain conditions, a tax deduction for expenditures related to scientific research and development projects, including capital expenditures, in the year in which they are incurred. Expenditures are deemed related to scientific research and development projects if: • the expenditures are approved by the relevant Israeli government ministry, which depends on the field of research; • the research and development must be for the promotion of the company; and • the research and development is carried out by or on behalf of the company seeking such tax deduction. The amount of such deductible expenses is reduced by the sum of any funds received through government grants to finance such scientific research and development projects. No deduction under these research and development deduction rules is allowed if the deduction is related to an expense invested in an asset depreciable under the general depreciation rules of the ITO. Expenditures that do not qualify under the conditions above are deductible in equal amounts over three years. From time to time, we may apply to the IIA for approval to allow a tax deduction for all or most of the research and development expenses during the year incurred. There can be no assurance that such application will be accepted. If we are not able to deduct research and development expenses during the year of the payment, we may be able to deduct research and development expenses in equal amounts over a period of three years commencing with the year of the payment of such expenses. Table of Contents 91
Law for the Encouragement of Capital Investments, 5719-1959 The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the “Investment Law”, provides certain incentives and tax benefits to eligible companies. Generally, an investment program that is implemented in accordance with the provisions of the Investment Law, which may be classified as an Approved Enterprise, a Beneficiary Enterprise, a Preferred Enterprise, a Special Preferred Enterprise, a Preferred Technological Enterprise, or a Special Preferred Technological Enterprise, is entitled to benefits as discussed below. These benefits may include cash grants from the Israeli government and tax benefits, based upon, among other things, the geographic location in Israel of the facility of the company. In order to qualify for these incentives, Pagaya is required to comply with the requirements of the Investment Law. The Investment Law was significantly amended effective as of April 1, 2005, as of January 1, 2011 and as of January 1, 2017 (the “2017 Amendment”). The 2017 Amendment introduced new benefits for Technological Enterprises, alongside the existing tax benefits. New tax benefits under the 2017 Amendment that became effective on January 1, 2017 The 2017 Amendment provides new tax benefits for two types of “Technological Enterprises,” as described below, which are in addition to the previously existing tax benefit programs under the Investment Law. The 2017 Amendment provides that a Preferred Company satisfying certain conditions will qualify as a “Preferred Technological Enterprise” and will thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as “Preferred Technological Income,” as defined in the Investment Law. The tax rate is further reduced to 7.5% for a Preferred Technological Enterprise located in Development Zone A. In addition, a Preferred Technological Enterprise will enjoy a reduced corporate tax rate of 12% on capital gains derived from the sale of certain “Benefitted Intangible Assets” (as defined in the Investment Law) to a related foreign company if the Benefitted Intangible Assets were acquired from a foreign company on or after January 1, 2017 for at least NIS 200 million, and the sale receives prior approval from the IIA. It should be noted that the proportion of income that may be considered Preferred Technological Income and enjoy the tax benefits described above is calculated according to a nexus formula, which is based on the proportion of qualifying expenditures on intellectual property compared to overall expenditures. The 2017 Amendment further provides that a Preferred Company with group consolidated revenues of at least NIS 10 billion will qualify as a “Special Preferred Technological Enterprise,” and will enjoy a reduced corporate tax rate of 6% on “Preferred Technological Income” regardless of the company’s geographic location within Israel. In addition, a Special Preferred Technological Enterprise will enjoy a reduced corporate tax rate of 6% on capital gains derived from the sale of certain “Benefitted Intangible Assets” to a related foreign company if the Benefitted Intangible Assets were either developed by the Special Preferred Enterprise or acquired from a foreign company on or after January 1, 2017, and the sale received prior approval from the IIA. A Special Preferred Technological Enterprise that acquires Benefitted Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least 10 years, subject to the receipt of certain approvals as specified in the Investment Law. Dividends paid out of Preferred Technological Income, which are distributed by a Preferred Technological Enterprise or a Special Preferred Technological Enterprise, are generally subject to tax at the rate of 20% or such lower rate as may be provided in an applicable tax treaty (subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate). However, if such dividends are paid to an Israeli company, no tax is required to be withheld. If such dividends are distributed to a foreign company that holds solely or together with other foreign companies 90% or more of the Israeli company and other conditions are met, the tax rate will be 4%. Dividends paid out to individuals may be subject to an additional surtax, as described below. In November 2021, an approval from the ITA was received stating Pagaya is entitled to the tax benefits under the 2017 Amendment, as a Preferred Technological Enterprise (for the tax years 2020 - 2024), subject to certain approvals and subject to certain limitations on the income eligible for such tax benefits. The approval can be extended upon request. Taxation of our shareholders Capital gains tax on sales of our Class A Ordinary Shares Israeli law generally imposes a capital gains tax on the sale of any capital assets by Israeli residents, as defined for Israeli tax purposes. Israeli law also generally imposes a capital gains tax on the sale of capital assets located in Israel, including shares in Israeli companies, by both Israeli residents and non-Israeli residents, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The ITO distinguishes between real gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain equivalent to the increase of the relevant asset’s purchase price attributable to an increase in the Israeli consumer price index, or, under certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. Inflationary surplus is currently not subject to tax in Israel. The real gain is the excess of the total capital gain over the inflationary surplus. Capital gains taxes applicable to Israeli resident shareholders Table of Contents 92
An Israeli resident corporation that derives capital gains from the sale of shares in an Israeli resident company will generally be subject to tax on the real capital gains generated on such sale at the corporate tax rate of 23% (in 2025). An Israeli resident individual will generally be subject to capital gains tax at the rate of 25%. However, if the individual shareholder claims deduction of interest expense and linkage differences in connection with the purchase and holding of such shares or is a “substantial shareholder” at the time of the sale or at any time during the preceding 12-month period, such gain will be taxed at the rate of 30%. A “substantial shareholder” is generally a person who alone, or together with such person’s related party or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights on how to exercise these rights, regardless of the source of such right. Individual holders dealing in securities in Israel for whom the income from the sale of securities is considered “business income” as defined in Section 2(1) of the ITO are taxed at the marginal tax rates applicable to business income (up to 47% in 2025) plus an additional surtax as described below. Certain Israeli institutions that are exempt from tax under Section 9(2) or Section 129C(a)(1) of the ITO (such as exempt trust funds and pension funds) may be exempt from capital gains tax from the sale of the shares. Capital gains taxes applicable to non-Israeli resident shareholders A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel will be exempt from Israeli tax if, among other conditions, the shares were not held through a permanent establishment that the non-resident maintains in Israel. However, non- Israeli corporations will not be entitled to the foregoing exemption if Israeli residents: (i) alone, or together with such Israeli residents’ related party or another person who collaborates with such Israeli resident on a permanent basis, hold, directly or indirectly, more than 25% of the means of control in such non-Israeli corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly. In addition, such exemption is not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be business income. Additionally, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under the Convention Between the Government of the United States of America and the Government of the State of Israel with respect to Taxes on Income, as amended (the “U.S.-Israel Tax Treaty”), the sale, exchange or other disposition of shares by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital asset and who is entitled to claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty (a “U.S. Resident”) is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising from such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such U.S. Resident holds, directly or indirectly, shares representing 10% or more of the company’s voting power during any part of the 12-month period preceding the disposition, subject to certain conditions; or (v) such U.S. Resident is an individual and was present in Israel for 183 days or more during the relevant taxable year. In any such case, the sale, exchange or disposition of our Class A Ordinary Shares by the U.S. Resident would be subject to Israeli tax, unless exempt under Israeli domestic law as described above. However, under the U.S.-Israel Tax Treaty, such U.S. Resident should be permitted to claim a credit for such taxes against U.S. federal income tax imposed on any gain from such sale, exchange or disposition, under the circumstances and subject to the limitations specified in the U.S.-Israel Tax Treaty or in the United States federal income tax laws applicable to foreign credits. In some instances where our shareholders may be liable for Israeli tax on the sale of their Class A Ordinary Shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise, the ITA may require shareholders who are not liable for Israeli tax to sign declarations in forms specified by the ITA or to obtain a specific exemption from the ITA to confirm their status as non-Israeli residents, and, in the absence of such declarations or exemptions, may require the purchaser of the shares to withhold taxes at source. A detailed return, including a computation of the tax due, must be filed and an advance payment must be paid by January 31 and July 31 of each tax year for sales of securities traded on a stock exchange made during the last six months of the preceding year or during the first six months of the current year, respectively. However, if all tax due was withheld at source according to applicable provisions of the ITO and the regulations promulgated thereunder, the return does not need to be filed provided that (i) such income was not generated from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed and an advance payment does not need to be made, and (iii) the taxpayer is not obligated to pay surtax (as further explained below). Capital gains are also reportable on an annual income tax return. Taxation of Israeli shareholders on receipt of dividends Table of Contents 93
An Israeli resident individual is generally subject to Israeli income tax on the receipt of dividends that may be paid on our Class A Ordinary Shares at the rate of 25%. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or at any time during the preceding 12-month period, the applicable tax rate is 30%. Individuals may also be required to pay surtax with respect to dividends received, as further explained below. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company (whether the recipient is a substantial shareholder or not) and 20% if the dividend is distributed from income attributed to a Preferred Enterprise or Technological Enterprise. If the recipient of the dividend is an Israeli resident corporation, such dividend income will be exempt from tax provided the income from which such dividend is distributed was derived or accrued within Israel and was received directly or indirectly from another corporation that is subject to Israeli corporate tax. An exempt trust fund, pension fund or other entity that is exempt from tax under Section 9(2) or Section 129(C)(a)(1) of the ITO is exempt from tax on dividends. Taxation of non-Israeli shareholders on receipt of dividends Non-Israeli residents (either individuals or corporations) are generally subject to Israeli income tax on the receipt of dividends that may be paid on our Class A Ordinary Shares at the rate of 25%, or 30% (plus an additional surtax, if applicable - as further described below) if the recipient of the dividends is a “substantial shareholder” at the time of distribution or at any time during the preceding 12-month period, which tax will be withheld at source, unless relief is provided in a treaty between Israel and the shareholder’s country of residence. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company (whether the recipient is a substantial shareholder or not). The withholding rates may be reduced if the dividend is distributed from income attributed to a Preferred Enterprise or Technological Enterprise or if a reduced rate is provided under an applicable tax treaty, in each case subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced withholding rate. For example, under the U.S.-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our Class A Ordinary Shares who is a U.S. Resident is 25%. However, the maximum withholding tax rate on dividends (not generated by a Preferred Technological Enterprise) that are paid to a United States corporation holding shares representing 10% or more of our outstanding voting power throughout the tax year in which the dividend is distributed as well as during the previous tax year is generally 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to a Preferred Technological Enterprise are not entitled to such reduction under the U.S.-Israel Tax Treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the conditions related to the outstanding voting rights and the gross income for the previous year (as set forth in the previous sentences) are met. If the dividend is attributable partly to income derived from a Preferred Technological Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability. A foreign resident who had income from a dividend that was accrued from Israeli source, from which the full tax was deducted, will generally be exempt from filing a tax return in Israel, provided that (i) such income was not generated from business conducted in Israel by the foreign resident, (ii) the foreign resident has no other taxable sources of income in Israel with respect to which a tax return is required to be filed and (iii) the foreign resident is not liable to surtax (see below) in accordance with Section 121B of the ITO. Surtax Subject to the provisions of any applicable tax treaty, individuals who are subject to tax in Israel (whether or not any such individual is an Israeli resident) are also subject to a surtax at the rate of 3% on annual income (including, but not limited to, dividends, interest and capital gains) exceeding NIS 721,560 for 2025, which amount is linked to the annual change in the Israeli consumer price index. Starting in 2025, a new law amendment introduces an additional 2% surtax specifically for capital resources above this threshold. In summary, Income from dividends, interest, real estate sales, and other capital sources exceeding NIS 721,560 will now incur a total surtax of 5%. Estate and Gift Tax Israeli law presently does not impose estate or gift taxes. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance Code of Conduct Table of Contents 94
We have adopted a Code of Conduct that applies to all our employees, officers and directors. Our Code of Conduct addresses, among other things, competition and fair dealing, gifts and entertainment, conflicts of interest, international business laws, financial matters and external reporting, company assets, confidentiality and corporate opportunity requirements and the process for reporting violations of the Code of Conduct. Our Code of Conduct is intended to meet the definition of “code of ethics” under the Exchange Act. We will disclose on our website any amendment to, or waiver from, a provision of our Code of Conduct that applies to our directors or executive officers to the extent required under the rules of the SEC or the Nasdaq. Our Code of Business Conduct is available on our website at https://investor.pagaya.com/corporate-governance/governance-overview. The information contained on or through our website, or any other website referred to herein, is not incorporated by reference in this Annual Report. Insider Trading Policy We have adopted an Insider Trading Policy governing the purchase, sale and/or other dispositions of our securities by directors, officers and employees of the Company that is designed to promote compliance with insider trading laws, rules and regulations. See Exhibit 19.1 to this Annual Report. Other Information The other information called for by this item is hereby incorporated herein by reference to Part III, Item 10 “Directors, Executive Officers and Corporate Governance” of the Company’s Annual Report on Form 10-K/A filed with the SEC on April 30, 2026. Item 11. Executive Compensation The information called for by this item is hereby incorporated herein by reference to Part III, Item 11 “Executive Compensation” of the Company’s Annual Report on Form 10-K/A filed with the SEC on April 30, 2026. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information called for by this item is hereby incorporated herein by reference to Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of the Company’s Annual Report on Form 10-K/ A filed with the SEC on April 30, 2026. Item 13. Certain Relationships and Related Transactions and Director Independence The information called for by this item is hereby incorporated herein by reference to Part III, Item 13 “Certain Relationships and Related Transactions and Director Independence” of the Company’s Annual Report on Form 10-K/A filed with the SEC on April 30, 2026. Item 14. Principal Accountant Fees and Services The information called for by this item is hereby incorporated herein by reference to Part III, Item 14 “Principal Accountant Fees and Services” of the Company’s Annual Report on Form 10-K/A filed with the SEC on April 30, 2026. PART IV Item 15. Exhibits and Financial Statement Schedules (a) Financial Statements We have appended our audited consolidated financial statements at the end of this Annual Report, starting at page F-1, as part of this Annual Report. (b) Financial Statement Schedules Financial statement schedules have been omitted because they are not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is shown in the consolidated financial statements or notes thereto. Table of Contents 95
(c) Exhibits Exhibit Number Description 3.1 Articles of Association of Pagaya Technologies Ltd., as amended and restated on December 11, 2024 (incorporated by reference to Exhibit 3.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on December 12, 2024) 4.1 Specimen Ordinary Share Certificate of Pagaya Technologies Ltd. (incorporated by reference to Exhibit 4.5 of Pagaya Technologies Ltd. Amendment No. 1 to Registration Statement on Form F-4 filed with the SEC on May 9, 2022) 4.2 Specimen Warrant Certificate of Pagaya Technologies Ltd. (incorporated by reference to Exhibit 4.6 of Pagaya Technologies Ltd. Amendment No. 1 to Registration Statement on Form F-4 filed with the SEC on May 9, 2022) 4.3 Warrant Agreement, by and among, dated as of February 24, 2021, between Continental Stock Transfer & Trust Company and EJF Acquisition Corp. (incorporated by reference to Exhibit 4.1 of EJF Acquisition Corp. Current Report on Form 8-K filed with the SEC on February 24, 2021) 4.4 Assignment, Assumption and Amendment Agreement, by and among Pagaya Technologies Ltd., EJF Acquisition Corp. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.7 of Pagaya Technologies Ltd. Amendment No. 2 to Registration Statement on Form F-4 filed with the SEC on May 18, 2022) 4.5 Form of Registration Rights Agreement (incorporated by reference to Exhibit 4.9 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 4.6 Form of Registration Rights Agreement, dated as of January 5, 2023, by and among Pagaya Technologies Ltd. and the Shareholders of Darwin Homes, Inc. (incorporated by reference to Exhibit 4.16 of Pagaya Technologies Ltd. Annual Report on Form 20-F filed with the SEC on April 20, 2023). 4.7 Registration Rights Agreement by and between the Registrant and B. Riley Principal Capital II, LLC, dated August 17, 2022 (incorporated by reference to Exhibit 10.2 to Current Report on Form 6-K filed on August 17, 2022). 4.8 Voting Agreement, dated as of April 14, 2023, by among Pagaya Technologies Ltd. and Gal Krubiner, Yahav Yulzari and Avital Pardo with regard to the Preferred Shares Purchase Agreement. (incorporated by reference to Exhibit 4.18 of Pagaya Technologies Ltd. Annual Report on Form 20-F filed with the SEC on April 20, 2023). 4.9 Description of Securities (incorporated by reference to Exhibit 4.9 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 4.10 Indenture, dated as of October 1, 2024, by and among the Company, Pagaya US and the Trustee (incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on October 1, 2024) 4.11 Form of Global Note, representing Pagaya US’s 6.125% Exchangeable Senior Notes due 2029 (included as Exhibit A to the Indenture referenced in Exhibit 4.10 hereto, which is incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on October 1, 2024) 4.12 Indenture, dated as of July 28, 2025, by and among the Company, Pagaya US and the Trustee (incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on July 28, 2025) 4.13 Form of Global Note, representing Pagaya US’s 8.875% Senior Notes due 2030 (included as Exhibit A to the Indenture referenced in Exhibit 4.12 hereto, which is incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on July 28, 2025) 10.1 Agreement and Plan of Merger, dated as of September 15, 2021, by and among Pagaya Technologies Ltd., EJF Acquisition Corp. and Rigel Merger Sub Inc. (incorporated by reference to Exhibit 2.1 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 10.2 Form of Subscription Agreement (incorporated by reference to Exhibit 10.8 of Pagaya’s Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 10.3 Credit Agreement, dated as of December 23, 2021, by and among Pagaya Technologies Ltd., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.15 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 10.4 Amendment No. 1 to Credit Agreement, dated as of March 15, 2022, by and among Pagaya Technologies Ltd., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.16 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) Table of Contents 96
10.5† Pagaya Technologies Ltd. Compensation Policy for Executive Officers and Directors (incorporated by reference to Exhibit 10.17 of Pagaya Technologies Ltd. Amendment No. 2 to Registration Statement on Form F-4 filed with the SEC on May 18, 2022) 10.6† Pagaya Technologies Ltd. 2023 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 6-K filed with the SEC on September 13, 2023) 10.7 Credit Agreement, dated as of February 2, 2024, by and among Pagaya Technologies Ltd. and Pagaya US Holding Company LLC, as the borrowers, the several lenders party thereto and Acquiom Agency Services LLC, as administrative agent (incorporated by reference to Exhibit 99.2 to Current Report on Form 6-K filed with the SEC on February 7, 2024). 10.8† Pagaya Technologies Ltd. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.9† Pagaya Technologies Ltd. 2016 Equity Incentive Plan Stock Option Sub-Plan for United States Persons (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.10† Pagaya Technologies Ltd. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.11† Pagaya Technologies Ltd. 2021 Equity Incentive Plan Stock Option Sub-Plan for United States Persons (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.12† Pagaya Technologies Ltd. 2022 Share Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-8 (File No. 333-265739), filed with the SEC on June 21, 2022) 10.13† Pagaya Technologies Ltd. 2022 Share Incentive Plan Sub-Plan for Israeli Participants (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022). 10.14† Form of Restricted Stock Unit Award Agreement under the Pagaya Technologies Ltd. 2022 Share Incentive Plan 10.15† Form of Restricted Stock Unit Award Agreement under the Pagaya Technologies Ltd. 2022 Share Incentive Plan and Sub-Plan for Israeli Participants 10.16† Form of Pagaya Technologies Ltd. Indemnification, Insurance and Exculpation Undertaking (incorporated by reference to Exhibit 10.14 of Pagaya Technologies Ltd. Amendment No. 2 to Registration Statement on Form F-4 filed with the SEC on May 18, 2022) 10.17† Preferred Shares Purchase Agreement, dated as of April 14, 2023, by and among Pagaya Technologies Ltd. and Oak HC/FT Partners V, L.P., Oak HC/FT Partners V-A, L.P. and Oak HC/FT Partners V-B, L.P. (incorporated by referenced to Exhibit 4.17 of Annual Report on Form 20-F filed with the SEC on April 20, 2023). 10.18† General Release and Settlement Agreement between Amol Naik and Pagaya Technologies US LLC (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on August 9, 2024) 10.19† Employment Agreement between Gal Krubiner and Pagaya Technologies US LLC. (incorporated by reference to Exhibit 10.2 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024) 10.2† Employment Agreement between Yahav Yulzari and Pagaya Technologies Ltd. (incorporated by reference to Exhibit 10.3 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024) 10.21† Employment Agreement between Avital Pardo and Pagaya Technologies Ltd. (incorporated by reference to Exhibit 10.21 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 10.22† Employment Agreement between Sanjiv Das and Pagaya Technologies US LLC. (incorporated by reference to Exhibit 10.22 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 10.23† Employment Agreement between Evangelos Perros and Pagaya Technologies US LLC. (incorporated by reference to Exhibit 10.23 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 10.24 Underwriting Agreement, dated March 13, 2024, between Pagaya Technologies Ltd. and Citigroup Global Markets Inc. and Jefferies LLC, as representatives of the several underwriters (incorporated by referenced to Exhibit 1.1 of Form 6-K filed with the SEC on March 18, 2024) 10.25 Amendment No. 1 to the Credit Agreement, dated as of September 26, 2024, among the Company as a borrower, Pagaya US as a borrower, the Lenders and Acquiom, as administrative agent (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on October 1, 2024) Table of Contents 97
10.26 Amendment No. 2 to Credit Agreement, dated as of November 5, 2024, among the Company as a borrower, Pagaya US as a borrower, the Lenders and Acquiom, as administrative agent (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024) 10.27 Amendment No. 3 to Credit Agreement, dated as of July 28, 2025, among the Company as a borrower, Pagaya US as a borrower, the Lenders and Acquiom, as administrative agent (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Quarterly Report on Form 8-K filed with the SEC on July 28, 2025) 10.28 Credit Agreement, dated as of October 1, 2025, by and among Pagaya Technologies Ltd. and Pagaya US Holding Company LLC, as the borrowers, the several lenders party thereto and BMO Bank N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on October 2, 2025) 10.29† Amendment No. 1 to the Employment Agreement between Sanjiv Das and Pagaya Technologies US LLC (incorporated by reference to Exhibit 10.3 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 10, 2025) 19.1 Pagaya Technologies Ltd. Insider Trading Policy (incorporated by reference to Exhibit 19.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 21.1 List of Subsidiaries of Pagaya Technologies Ltd. (incorporated by reference to Exhibit 21.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 23.1 Consent of Kost Forer Gabbay & Kasierer, a member firm of EY Global, independent registered accounting firm for Pagaya Technologies Ltd. (incorporated by reference to Exhibit 23.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 23.2* Consent of Kost Forer Gabbay & Kasierer, a member firm of EY Global, independent registered accounting firm for Pagaya Technologies Ltd. 24.1 Power of Attorney (included on the signature page of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 31.1 Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 31.2 Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.2 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 31.3 Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.3 of Pagaya Technologies Ltd. Annual Report on Form 10-K/A filed with the SEC on April 30, 2026) 31.4 Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.4 of Pagaya Technologies Ltd. Annual Report on Form 10-K/A filed with the SEC on April 30, 2026) 31.5* Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 31.6* Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 32.1 Certificate of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes- Oxley Act of 2002 (incorporated by reference to Exhibit 32.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 32.2 Certificate of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes- Oxley Act of 2002 (incorporated by reference to Exhibit 32.2 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 32.3* Certificate of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes- Oxley Act of 2002 32.4* Certificate of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes- Oxley Act of 2002 97.1 Incentive Compensation Recoupment Policy, approved by the Board on November 29, 2023 (incorporated by reference to Exhibit 97.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Table of Contents 98
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith † Indicates a management contract or compensatory plan. Item 16. Form 10-K Summary None. Table of Contents 99
SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 10-K and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf. PAGAYA TECHNOLOGIES LTD. Date: June 1, 2026 By: /s/ Gal Krubiner Name: Gal Krubiner Title: Chief Executive Officer Date: June 1, 2026 By: /s/ Evangelos Perros Name: Evangelos Perros Title: Chief Financial Officer Table of Contents 100
PAGAYA TECHNOLOGIES LTD. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2025 INDEX INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 1281) F-2 Consolidated Balance Sheets F-6 Consolidated Statements of Operations F-7 Consolidated Statements of Comprehensive Income (Loss) F-8 Consolidated Statements of Changes in Redeemable Convertible Preferred Shares F-9 Consolidated Statements of Cash Flows F-11 Notes to Consolidated Financial Statements F-13 Table of Contents F-1
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Pagaya Technologies Ltd. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Pagaya Technologies Ltd. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in redeemable convertible preferred shares and shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 2, 2026, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as Table of Contents F-2
a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Investments in Securities – Level 3 Investments Description of the Matter At December 31, 2025, the Company’s Level 3 investments in certificates and subordinated notes at fair value totaled $872,976 thousand. As described in Notes 2 and 10 to the consolidated financial statements, investments in securities categorized as Level 3 investments include subordinated notes and certificates which are measured at fair value on a recurring basis (the "investments"). The estimate of fair value of these investments requires significant judgment. The Company uses a discounted cash flow model to estimate the fair value of these investments based on the present value of estimated future cash flows. The cash flow model uses unobservable inputs and reflects management's best estimates of the assumptions a market participant would use to calculate fair value of the particular investment. Primary inputs that require significant judgment include discount rates, net credit loss expectations, expected prepayment rates and consideration of any optional redemption features in the Company's investments. We identified the valuation of Level 3 investments as a critical audit matter due to the significant judgments involved in estimating fair value, including the selection of valuation methodologies and the development of unobservable inputs. This required a high degree of auditor judgment and extensive audit effort, including the involvement of fair value specialists. How We Addressed the Matter in Our Audit We obtained an understanding, tested the design and operating effectiveness of controls over the Company’s Level 3 investments valuation process. This included controls over management’s assessment of the valuation methodologies and the unobservable inputs and assumptions used in determining fair value. Our audit procedures related to the estimation of the fair value of Level 3 investments included evaluating the appropriateness of the valuation methodologies used for Level 3 investments, testing the accuracy and completeness of the data used in estimating fair value, and, for a sample of the Company’s Level 3 investments, independently developing fair value estimates with the involvement of our valuation specialists and comparing them to the Company’s estimates. In developing our independent fair value estimates, we considered current economic conditions, historical results and trends of the significant assumptions related to the underlying assets of the investments. /s/KOST FORER GABBAY & KASIERER A Member of EY Global We have served as the Company's auditor since 2018. Tel-Aviv, Israel March 2, 2026 except for the presentation of long-term assets as described in Note 19B. and subsequent events as described in Note 20, as to which the date is June 1, 2026 Table of Contents F-3
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Pagaya Technologies Ltd. Opinion on Internal Control Over Financial Reporting We have audited Pagaya Technologies Ltd.'s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Pagaya Technologies Ltd. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in redeemable convertible preferred shares and shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated March 2, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Table of Contents F-4
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/KOST FORER GABBAY & KASIERER A Member of EY Global Tel-Aviv, Israel March 2, 2026 Table of Contents F-5
PAGAYA TECHNOLOGIES LTD. CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2025 AND 2024 (In thousands, except share amounts) December 31, December 31, 2025 2024 Assets Cash and cash equivalents $ 235,329 $ 187,921 Restricted cash and cash equivalents 53,020 38,597 Fees receivables (1)(2) 153,250 127,114 Investments in loans and securities (1) 945,269 778,409 Equity method and other investments 13,518 21,933 Right-of-use assets 30,578 36,876 Property, equipment and software, net 30,221 37,974 Goodwill 22,903 23,062 Intangible assets, net 7,661 12,821 Other assets (2) 54,165 26,365 Total Assets $ 1,545,914 $ 1,291,072 Liabilities and Shareholders’ Equity Accounts payable $ 3,931 $ 6,992 Accrued expenses and other liabilities 74,635 45,362 Operating lease liabilities 34,212 37,064 Income taxes payable and other tax liabilities 18,687 41,217 Warrant liability 4,723 893 Secured borrowing 193,892 176,089 Exchangeable notes 148,782 146,342 Long-term debt 481,598 321,317 Total Liabilities 960,460 775,276 Redeemable convertible preferred shares, no par value, 6,666,666 shares authorized, 2,027,147 and 5,000,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively; aggregate liquidation preference of $60,814 and $150,000 as of December 31, 2025 and 2024, respectively. 30,103 74,250 Shareholders’ equity: Class A ordinary shares, no par value, 666,666,666 shares authorized, 70,747,357 and 61,227,672 shares issued and outstanding as of December 31, 2025 and 2024, respectively. — — Class B ordinary shares, no par value, 166,666,666 shares authorized, 11,288,577 and 12,652,310 shares issued and outstanding as of December 31, 2025 and 2024, respectively. — — Additional paid-in capital 1,390,990 1,282,022 Accumulated other comprehensive loss (48,319) (11,488) Accumulated deficit (862,654) (944,043) Total Pagaya Technologies Ltd. shareholders’ equity 480,017 326,491 Noncontrolling interests 75,334 115,055 Total shareholders’ equity 555,351 441,546 Total Liabilities, Redeemable Convertible Preferred Shares, and Shareholders’ Equity $ 1,545,914 $ 1,291,072 (1) Accrued interest receivable of $14.3 million, previously reported within “Fee receivables” as of December 31, 2024, has been reclassified to “Investment in loans and securities” to conform to the current period’s presentation. (2) Includes related party fee receivables of $106.9 million and $99.4 million, and related party other assets of $42.6 million and $15.2 million, as of December 31, 2025 and 2024, respectively. See Note 17 for additional information regarding transactions with related parties. Table of Contents F-6
PAGAYA TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2025, 2024 AND 2023 (In thousands, except share and per share data) 2025 2024 2023 Revenue Revenue from fees (1) $ 1,261,341 $ 1,004,550 $ 772,814 Other Income Interest income 48,434 32,291 38,748 Investment (loss) income (8,415) (4,593) 489 Total Revenue and Other Income 1,301,360 1,032,248 812,051 Production costs 749,169 597,652 508,944 Technology, data and product development 75,213 76,571 74,383 Sales and marketing 53,591 50,404 49,773 General and administrative 159,560 240,781 203,351 Total Costs and Operating Expenses 1,037,533 965,408 836,451 Operating Income (Loss) 263,827 66,840 (24,400) Gains and (losses) on investments in loans and securities (2) (107,030) (404,150) (131,315) Other expenses, net (2) (80,417) (83,612) (25,453) Gains and (losses) from extinguishment of debt (2) (24,755) (200) — Income (Loss) Before Income Taxes 51,625 (421,122) (181,168) Income tax (benefit) expense (19,745) 24,576 15,571 Net Income (Loss) Including Noncontrolling Interests 71,370 (445,698) (196,739) Less: Net income (loss) attributable to noncontrolling interests (10,019) (44,292) (68,301) Net Income (Loss) Attributable to Pagaya Technologies Ltd. $ 81,389 $ (401,406) $ (128,438) Earnings (loss) per share attributable to Pagaya Technologies Ltd. ordinary shareholders: Basic $ 0.99 $ (5.66) $ (2.14) Diluted $ 0.93 $ (5.66) $ (2.14) Weighted average shares outstanding: Basic 78,336,095 70,879,807 60,038,893 Diluted 83,097,227 70,879,807 60,038,893 (1) Includes related party revenues of $652.7 million, $679.1 million and $622.2 million for years ended December 31, 2025, 2024 and 2023, respectively. See Note 17 for additional information regarding transactions with related parties. (2) Prior period amounts have been reclassified to conform to the current period’s presentation. The accompanying notes are an integral part of these consolidated financial statements Table of Contents F-7
PAGAYA TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR YEAR ENDED DECEMBER 31, 2025, 2024 AND 2023 (In thousands) 2025 2024 2023 Net Income (Loss) Including Noncontrolling Interests $ 71,370 $ (445,698) $ (196,739) Other Comprehensive Income (Loss): Unrealized non-credit related adjustments to investment securities (40,771) (12,753) 7,999 Comprehensive Income (Loss) Including Noncontrolling Interests $ 30,599 $ (458,451) $ (188,740) Less: Comprehensive loss attributable to noncontrolling interests (13,959) (45,113) (61,459) Comprehensive Income (Loss) Attributable to Pagaya Technologies Ltd. $ 44,558 $ (413,338) $ (127,281) Table of Contents F-8
PAGAYA TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY FOR YEAR ENDED DECEMBER 31, 2025, 2024 AND 2023 (In thousands, except share amounts) Redeemable Convertible Preferred Shares Ordinary Shares (Class A and Class B) Additional Paid-In Capital Accumulated Other Comprehensiv e (Loss) Income Accumulated Deficit Total Pagaya Technologies Ltd. Shareholders’ Equity Non- Controlling Interests Total Shareholders’ EquityShares Amount Shares Amount Balance – December 31, 2022 — $ — 56,942,632 $ — $ 968,432 $ (713) $ (414,199) $ 553,520 $ 211,903 $ 765,423 Issuance of ordinary shares upon exercise of warrants — — 99,711 — — — — — — — Issuance of ordinary shares upon exercise of share options — — 925,240 — 4,334 — — 4,334 — 4,334 Issuance of ordinary shares upon vesting of RSUs — — 962,679 — — — — — — — Issuance of preferred shares, net of issuance costs of $750 5,000,000 74,250 — — — — — — — — Share-based compensation — — — — 78,721 — — 78,721 — 78,721 Reversal of issuance costs associated with the Business Combination and PIPE Investment — — — — 4,401 — — 4,401 — 4,401 Issuance of ordinary shares in connection with the acquisition of Darwin Homes, Inc. — — 1,525,827 — 18,134 — — 18,134 — 18,134 Issuance of ordinary shares from the Equity Financing Purchase Agreement — — 1,587,157 — 27,892 — — 27,892 — 27,892 Reclassification of investments — — — — — (1,881) — (1,881) 18,341 16,460 Contributions of interests in consolidated VIEs — — — — — — — — 19,955 19,955 Return of capital to interests in consolidated VIEs — — — — — — — — (64,371) (64,371) Other comprehensive income (loss) — — — — — 3,038 — 3,038 (11,499) (8,461) Net loss — — — — — — (128,438) (128,438) (68,301) (196,739) Balance – December 31, 2023 5,000,000 $ 74,250 62,043,246 $ — $ 1,101,914 $ 444 $ (542,637) $ 559,721 $ 106,028 $ 665,749 Issuance of ordinary shares upon exercise of share options — — 586,847 — 2,640 — — 2,640 — 2,640 Issuance of ordinary shares upon vesting of RSUs — — 2,371,735 — — — — — — — Issuance of ordinary shares upon employee stock purchase plan — — 59,145 — 665 — — 665 — 665 Share-based compensation — — — — 68,646 — — 68,646 — 68,646 Issuance of ordinary shares, net of issuance cost of $5,312 — — 7,500,000 — 89,956 — — 89,956 — 89,956 Table of Contents F-9
Issuance of ordinary shares from the Equity Financing Purchase Agreement — — 814,569 — 12,232 — — 12,232 — 12,232 Acquisition of Theorem Technology, Inc. — — 504,440 5,969 — — 5,969 — 5,969 Contributions of interests in consolidated VIEs — — — — — — — — 63,960 63,960 Return of capital to interests in consolidated VIEs — — — — — — — — (9,820) (9,820) Other comprehensive loss — — — — — (11,932) — (11,932) (821) (12,753) Net loss — — — — — — (401,406) (401,406) (44,292) (445,698) Balance – December 31, 2024 5,000,000 $ 74,250 73,879,982 $ — $ 1,282,022 $ (11,488) $ (944,043) $ 326,491 $ 115,055 $ 441,546 Issuance of ordinary shares upon exercise of warrants — — 1,309,157 — — — — — — — Issuance of ordinary shares upon exercise of share options — — 769,167 — 5,759 — — 5,759 — 5,759 Issuance of ordinary shares upon vesting of RSUs — — 3,005,532 — — — — — — — Issuance of ordinary shares upon employee stock purchase plan — — 99,243 — 1,164 — — 1,164 — 1,164 Issuance of ordinary shares upon conversion of preferred shares (2,972,853) (44,147) 2,972,853 44,147 — — 44,147 — 44,147 Share-based compensation — — — — 57,898 — — 57,898 — 57,898 Return of capital to interests in consolidated VIEs — — — — — — — — (25,762) (25,762) Other comprehensive loss — — — — — (36,831) — (36,831) (3,940) (40,771) Net income — — — — — — 81,389 81,389 (10,019) 71,370 Balance – December 31, 2025 2,027,147 $ 30,103 82,035,934 $ — $ 1,390,990 $ (48,319) $ (862,654) $ 480,017 $ 75,334 $ 555,351 The accompanying notes are an integral part of these consolidated financial statements Table of Contents F-10
PAGAYA TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 2025, 2024 AND 2023 (In thousands) 2025 2024 2023 Cash flows from operating activities Net income (loss) including noncontrolling interests $ 71,370 $ (445,698) $ (196,739) Adjustments to reconcile net income (loss) to net cash used in operating activities: Equity method and other investments loss (income) 8,415 4,593 (488) Depreciation and amortization 30,077 28,753 19,127 Share-based compensation 54,118 61,497 71,055 Fair value adjustment to warrant liability 3,830 (2,349) 1,842 (Gains) and losses on investments in loans and securities (1) 108,907 408,098 134,510 Write-off of capitalized software and other assets 4,919 3,245 2,475 Amortization of deferred costs 11,253 3,739 — Losses (gains) from extinguishment of debt 17,883 — — Losses (gains) on foreign exchange 1,115 4,189 (1,320) Other non-cash items — 367 — Change in operating assets and liabilities: Fees receivables (1) (26,283) (23,041) (25,464) Accrued interest on investments (1) (42,824) (21,738) (26,512) Right-of-use assets 6,298 1,115 3,854 Other assets (13,350) (9,239) 12,912 Accounts payable 3,420 5,678 (448) Accrued expenses and other liabilities 28,518 6,861 (17,770) Operating lease liability (6,517) 522 (3,712) Income taxes (22,529) 21,159 5,019 Net cash provided by (used in) operating activities 238,620 47,751 (21,659) Cash flows from investing activities Proceeds from the maturity and prepayment of investments in loans and securities (1) 273,039 132,423 203,297 Proceeds from the sales of investments in loans and securities 79,176 114,117 — Proceeds from equity method and other investments — 31 — Cash and restricted cash acquired from Darwin Homes, Inc. — — 1,608 Purchases of investments in loans and securities (632,182) (693,941) (566,173) Purchases of property, equipment and software (13,902) (17,737) (20,189) Purchases of intangible assets — (5,500) — Purchases of equity method and other investments — (175) — Purchases of other assets (2) (16,000) — — Acquisition of Theorem Technology, Inc., net of cash acquired 159 (9,094) — Net cash used in investing activities (309,710) (479,876) (381,457) Cash flows from financing activities Proceeds from sale of ordinary shares, net of issuance costs — 89,956 — Proceeds from long-term debt 500,000 341,845 — Proceeds from exchangeable notes — 152,000 — Proceeds from issuance of redeemable convertible preferred shares, net — — 74,250 Proceeds from secured borrowing 355,968 265,656 338,472 Proceeds received from noncontrolling interests — 63,960 19,955 Proceeds from revolving credit facility — 59,000 130,000 Proceeds from exercise of stock options, warrants and contributions to ESPP 6,923 3,305 4,334 Proceeds from issuance of ordinary shares from the Equity Financing Purchase Agreement — 11,865 27,892 Distributions made to noncontrolling interests (25,762) (9,820) (43,767) Payments made to revolving credit facility — (149,000) (55,000) Payments made to secured borrowing (341,350) (361,428) (206,390) Payments made to long-term debt (353,690) (14,000) — Table of Contents F-11
Debt issuance costs (12,488) (16,651) — Settlement of share-based compensation in satisfaction of tax withholding requirements — — (650) Net cash provided by financing activities 129,601 436,688 289,096 Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents 3,320 (586) (515) Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents 61,831 3,977 (114,535) Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period 226,518 222,541 337,076 Cash and cash equivalents, and restricted cash and cash equivalents, end of period $ 288,349 $ 226,518 $ 222,541 Reconciliation of cash and cash equivalents, and restricted cash and cash equivalents within the consolidated balance sheet to the amounts shown in the statements of cash flow above: Cash and cash equivalents $ 235,329 $ 187,921 $ 186,478 Restricted cash and cash equivalents 53,020 38,597 36,063 Total cash and cash equivalents, and restricted cash and cash equivalents $ 288,349 $ 226,518 $ 222,541 Supplemental disclosures of cash flow information Cash paid for income taxes (3) $ 2,495 $ 4,908 $ 9,174 Cash paid for interest expense 91,794 80,321 17,779 Cash paid for operating leases 13,119 13,056 14,103 Supplemental disclosure of non-cash activities Initial recognition (derecognition) of right-of-use assets and operating lease liability $ (113) $ (17,737) $ (1,839) In-kind distributions — — 20,603 Issuance of ordinary shares in connection with acquisitions — 5,969 18,134 Stock-based compensation included in capitalized internal-use software 3,780 7,149 8,315 Contingent consideration liability in connection with the acquisition of Theorem 183 6,090 — (1) Accrued interest receivable previously reported within “Fee receivables” in the prior periods has been reclassified to “Investment in loans and securities” to conform to the current period’s presentation. (2) Represents an investment in an affiliate by settling its third-party debt using restricted cash collateralized on the Company's balance sheets. (3) See Note 16 for additional information regarding the income taxes paid by jurisdiction. The accompanying notes are an integral part of these consolidated financial statements Table of Contents F-12
PAGAYA TECHNOLOGIES LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BUSINESS DESCRIPTION Pagaya Technologies Ltd. and its consolidated subsidiaries (together “we” “our” “Pagaya” or the “Company”) is a technology company that deploys sophisticated data science and proprietary AI technology to drive better results for financial services and other service providers, their customers, and asset investors. Services providers integrated with Pagaya’s network, which are referred to as “Partners,” range from high-growth financial technology companies to incumbent banks and financial institutions, auto finance providers and residential real estate service providers. Partners have access to Pagaya’s network in order to assist with extending financial products to their customers, in turn helping those customers fulfill their financial needs and dreams. These assets originated by Partners with the assistance of Pagaya’s AI technology are eligible to be acquired by (i) funds managed or advised by Pagaya or one of its affiliates, (ii) securitization vehicles sponsored or administered by Pagaya or one of its affiliates, (iii) special purpose vehicles established by third-party investors to facilitate the purchase of assets under forward flow agreements and (iv) other similar vehicles (“Financing Vehicles”). Pagaya Technologies Ltd. was founded in 2016 and is organized under the laws of the State of Israel. Pagaya has its primary offices in Israel and the United States. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company, its wholly-owned subsidiaries, and consolidated variable interest entities (“VIEs”) if any. All intercompany accounts and transactions have been eliminated. Variable Interest Entities A VIE is a legal entity that has a total equity investment that is insufficient to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. The Company’s variable interest arises from contractual ownership or other monetary interests in the entity, which may change with fluctuations in the fair value of the VIE’s net assets. A VIE is consolidated by its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance, and an obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates a VIE when it is deemed to be the primary beneficiary. The Company assesses whether or not it is the primary beneficiary of a VIE at initial involvement and on an ongoing basis. Refer to Note 6 for additional information. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions made in the accompanying consolidated financial statements, which Management believes are critical in understanding and evaluating the Company’s reported financial results include, but are not limited to the valuation of certain financial instruments and allowance for credit losses. The Company bases its estimates or assumptions on various factors it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods. Segment Reporting The Company manages its operations and allocates resources as a single operating segment. Further, the Company manages, monitors and reports its financials as a single reporting segment. The Company’s chief operating decision-maker is its Chief Executive Officer who makes operating decisions, assesses financial performance and allocates resources based on consolidated financial information. As such, the Company has determined that it operates one reportable segment. Table of Contents F-13
Foreign Currency The functional and reporting currency of the Company is the U.S. Dollar as it is the currency of the primary economic environment in which Pagaya’s operations are conducted. The monetary assets and liabilities denominated in currencies other than the U.S. Dollar are accordingly remeasured into U.S. Dollars at exchange rates in effect at the end of each period in accordance with Statement of the Accounting Standard Codification (“ASC”) No. 830 “Foreign Currency Matters” (“ASC No. 830”). All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the consolidated statements of operations within other expenses, net, as appropriate. During the year ended December 31, 2025, 2024, and 2023 the Company has recorded $1.1 million losses, $4.2 million losses and $1.3 million gains, respectively, on the consolidated statements of operations. Cash and Cash Equivalents, and Restricted Cash and Cash Equivalents Cash and cash equivalents consist of checking, money market and savings accounts held at financial institutions or highly liquid investments purchased with an original maturity of three months or less. Cash equivalents are stated at carrying value, which approximates fair value. Restricted cash and cash equivalents consist primarily of: (i) deposits restricted by standby letters of credit for lease facilities; and (ii) funds held in accounts as collateral for certain guarantees that the Company provide within the ordinary course of business, including certain securitization transactions. The Company has no ability to draw on such funds as long as the funds remain restricted under the applicable agreements. See Note 15 for additional information. Concentrations of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents, restricted cash and cash equivalents and fees receivable. Cash and cash equivalents are principally maintained with major financial institutions, which management assesses to be of high credit quality. The Company has not experienced any losses on these deposits. The Company’s fees receivable balances are predominantly with agreements with customers, and these are subject to normal credit risks which management believes to be not significant. Significant customers are those which represent 10% or more of the Company’s total revenue for each respective period presented. For the year ended December 31, 2025, no single customer accounted for 10% or more of the Company’s total revenue. During the year ended December 31, 2024 and December 31, 2023, one customer individually represented greater than 10% of total revenue and collectively totaled approximately 13% and 11%, respectively. Fair Value Measurement ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, when available. If such quoted market prices are not available, fair value is based upon models that use, as inputs, observable market-based parameters to the greatest extent possible. Additionally, ASC 820 established a fair value hierarchy to categorize the use of inputs into the following three levels: Level 1—Quoted prices, unadjusted, for identical assets or liabilities in active markets. Level 2—Pricing inputs are other than quoted prices in active markets and include 1) quoted prices for similar assets or liabilities in active markets, 2) quoted prices for identical or similar assets or liabilities in markets that are not active, and 3) or inputs that are derived principally from or can be corroborated by observable market data by correlation or other means. Level 3—Pricing inputs are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and considers factors specific to the asset or liability. Table of Contents F-14
Management believes that the carrying amount of cash and cash equivalents, and restricted cash and cash equivalents, fees receivable, accounts payables, and accrued expenses and other liabilities approximate their fair value due to the short-term maturities of these instruments. Investments in Loans and Securities A wholly-owned subsidiary (“Sponsor”) previously sponsors securitization transactions (the “Securitizations”), each through a separate trust structure with an asset portfolio consisting of unsecured consumer loans, auto loans, point-of-sale loans or real estate assets. Each Securitization’s asset portfolio was structured by the Sponsor, which is also the administrator of each Securitization. The Sponsor, directly and indirectly through affiliates, retained at least 5% of the economic risk in the Securitizations to comply with risk retention required by Title 17 U.S. Code of Federal Regulations Part 246, Credit Risk Retention, promulgated by Securities and Exchange Commission. Investments in Loans and Securities Available for Sale Investments in loans and securities that may be sold in response to changes in market interest or prepayment rates, needs for liquidity, and changes in the availability and the yield of alternative investments will be classified as available for sale (“AFS”). These investments are carried at fair value estimated using the following when available: public market prices, dealer quotes, and prices obtained from independent pricing services that may be derivable from observable and unobservable market inputs. The Company incorporates these market-based inputs into an internal discounted cash flow model to determine the fair value estimate for these investments. Generally these investments are held at fair value with changes in fair value recorded in unrealized non-credit related adjustments to investment securities within other comprehensive income (loss), excluding the portion relating to any credit loss. As of the end of each reporting period, management reviews each security where the fair value is less than the amortized cost to determine whether any portion of the decline in fair value is due to a credit loss and/or whether or not management intend to sell or will be required to sell such security before recovery of its amortized cost basis. The portion of any decline in fair value which management identifies as a credit loss will be recognized as an allowance for credit losses through gains and (losses) on investments in loans and securities. To the extent management intends to sell or may be required to sell a security in an unrealized loss position, the Company (1) reverses any previously recorded allowance for credit losses with an offsetting entry to reduce the amortized cost basis of the security and (2) writes-off any remaining portion of the amortized cost basis to equal its fair value, with this change recorded through gains and (losses) on investments in loans and securities. See Note 5 for additional information. Impaired loans and investments are classified as non-accrual status. Non-accrual loans and investments are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan or investment has sufficient collateral value and is in the process of collection. Investments in securities, under the fair value option The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument are reported in earnings at each subsequent reporting date. We elect the fair value option to measure certain securities, as we believe that fair value best reflects the economic transaction of investing in these instruments. The Company’s fair value estimate for these securities is based on a discounted cash flow methodology, while also considering market data as it becomes available. We record the initial fair value measurement and subsequent measurement changes in fair value in the period in which the changes occur within gains and (losses) on investments in loans and securities in the consolidated statements of operations. Equity Method and Other Investments The Company uses the equity method of accounting for investments in entities that the Company does not control but has the ability to exercise significant influence over the financial and operating policies of the investee. Under the equity method of accounting, the Company’s share of the investee’s underlying net income or loss is recorded as investment income or loss on the consolidated statements of operations. Distributions received from the investment reduce the Company’s carrying value of the investee. Table of Contents F-15
The Company elected to account for its equity investments over which it does not exercise control or significant influence using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. The investments are reviewed periodically to determine if their respective values have appreciated or have been impaired, and adjustments are recorded as necessary. During the year ended December 31, 2025, 2024 and 2023, the Company recorded a loss of $8.4 million and $4.6 million and income of $0.5 million, respectively, related to revaluation of its investments in privately held companies. See Note 5 for additional information. Property, Equipment and Software, Net Property, equipment and software are stated at historical cost, less accumulated depreciation and amortization. Depreciation of property, equipment and software is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives by asset category are as follows: Computer and software 3 to 7 years Furniture and equipment 3 to 7 years Internal-use software 2 years Leasehold improvements Shorter of remaining lease term or estimated useful life Maintenance and repairs that do not enhance or extend the asset’s useful life are expensed as incurred. Major replacements, improvements and additions are capitalized. Upon the sale or retirement of property, equipment and software, the cost and the related accumulated depreciation or amortization are removed from the consolidated financial statements, with any resulting gain or loss included in the consolidated statements of operations. Property, equipment and software is tested for impairment when there is an indication that the carrying value of an asset group may not be recoverable. Carrying values are not recoverable when the undiscounted cash flows estimated to be generated by the assets are less than their carrying values. When an asset is determined not to be recoverable, the impairment is measured based on the excess, if any, of the carrying value of the asset over its respective fair value and recorded in the period the determination is made. Internal-Use Software Internally developed software is capitalized upon completion of the preliminary project stage, when it becomes probable that the project will be completed, and the software will be used as intended. Capitalized costs primarily consist of salaries and payroll related costs for employees directly involved in development efforts. Costs related to the preliminary project stage and activities occurring after the implementation of the software are expensed as incurred. Costs incurred for software upgrades are capitalized if they result in additional functionalities or substantial enhancements. Capitalized internal-use software is included in property, equipment and software, net, in the consolidated balance sheets, and amortization expense is included in technology, data and product development expenses in the consolidated statements of operations. The Company reviews on a regular basis list of projects that are in process and if the project is to be abandoned or discontinued the capitalized costs associated with that project are expensed immediately. Goodwill and Intangible Assets Goodwill represents the fair value of an acquired business in excess of the fair value of the identified net assets acquired. Goodwill is tested for impairment at the reporting unit level annually or whenever indicators of impairment exist. Impairment of goodwill is the condition that exists when the carrying amount of a reporting unit that includes goodwill exceeds its fair value. The Company may assess goodwill for impairment initially using a qualitative approach, referred to as “step zero”, to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If management concludes, based on its assessment of relevant events, facts and circumstances, that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any impairment. The Company may alternatively elect to initially perform a quantitative assessment and bypass the qualitative assessment. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. Therefore, if the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. The Company’s annual impairment testing date is October 1. Table of Contents F-16
Definite-lived intangible assets are amortized on a straight-line basis over their useful lives. The Company's long-lived assets and identifiable intangibles that are subject to amortization are reviewed for impairment in accordance with ASC 360, “Property, Plant, and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include any significant changes in the manner of the Company's use of the assets and significant negative industry or economic trends. Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset, an impairment charge is recorded for the excess of the carrying amount over fair value. See Note 3 for further discussion of goodwill and intangible assets, including those recognized in connection with recent business combinations. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For warrants that meet all of the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are recorded at their initial fair value on the date of issuance and remeasured each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash other income or expense, included in other expenses, net in the consolidated statements of operations. Revenue Recognition The Company’s revenue consists of two components: revenue from fees and revenue from other income, which is comprised of interest income and investment income. The amount of revenue from fees recognized reflects the consideration that the Company expects to receive in exchange for services provided. The Company applied the following five steps: 1. Identification of the contract with the customer: The Company determines a contract with a customer exists when each party’s rights regarding the services to be transferred can be identified, the payment terms for the services can be identified, a conclusion has been reached that the customer has the ability and intent to pay, and the contract has commercial substance. 2. Identification of the performance obligations in the contract: Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct and separately identifiable, whereby the customer can benefit from the services. 3. Determination of the transaction price: The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. Payment terms and conditions vary by contract. 4. Allocation of the transaction price to the performance obligations in the contract: If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation. Table of Contents F-17
5. Recognition of revenue when, or as, a performance obligation is satisfied: Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised delivery of service to the customer. See Note 4 for additional information. Interest Income Interest income is recognized based on projected cash flows according to ASC 325-40, Beneficial Interests in Securitized Financial Assets. The Company accrues interest income on investments based on the effective interest rate of the investments and records it as interest income as earned. Loans and securities that have reached a delinquency of 90 days or more, or where management has doubts about collectability, are classified as non-accrual status. Investments are returned to accrual status when sufficient cash payments have been received in management’s judgment supports estimated future collections. As of December 31, 2025 and 2024, the Company has recorded $25.8 million and $13.7 million of accrued interest receivable in fees receivables on the consolidated balance sheets, respectively. Interest income earned from cash and cash equivalents is recorded on an accrual basis to the extent such interest is earned and expected to be collected. Production Costs Production costs are primarily comprised of fees the Company incurs to Partners when network volume is acquired by Financing Vehicles as the Partners are responsible for marketing and customer interaction, and facilitating the flow of additional application flow. Technology, Data and Product Development Costs Technology, data and product development costs are primarily engineering and product development expenses which primarily consists of payroll and other employee-related expenses, including share-based compensation expenses, for the engineering and product development teams as well the costs of systems and tools used by these teams. These costs, net of amounts capitalized, are recognized in the period incurred. The capitalized internal-use software is amortized on a straight-line method over the estimated useful life in technology, data and product development costs and included in technology, data and production development in the consolidated statements of operations. Gains and (losses) on investments in loans and securities Gains and (losses) on investments in loans and securities primarily reflects changes in fair value that management identifies as credit losses or reversals of previously recognized credit losses on available for sale investment securities, including remeasurements of any loans or investments accounted for under the fair value option and any gain or loss realized upon sale or termination of such investments. As of the end of each reporting period, management reviews each available for sale security where the fair value is less than the amortized cost to determine whether any portion of the decline in fair value is due to a credit loss and/or whether or not management intend to sell or will be required to sell such security before recovery of its amortized cost basis. The portion of any decline (or recovery) in fair value which management identifies as a credit loss (or a reversal of previously recognized credit loss) is recognized as loss (or gain) on investments in loans and securities. Leases The Company accounts for its leases under ASC 842, Leases. Under this guidance, lessees classify arrangements meeting the definition of a lease as operating or financing leases, and leases are recorded on the consolidated balance sheets as both a right- of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses, including insurance and property tax, are recorded when incurred. The Company accounts for any subleases on a gross basis with sublease income presented in Other expenses, net on the consolidated statement of operations. In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components for all classes of assets. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election, and instead recognizes rent expense on a straight-line basis over the lease term. Table of Contents F-18
Share-Based Compensation The Company grants options and restricted stock units to employees and nonemployees. The Company measures options based on the estimated grant date fair values, which the Company determines using the Black-Scholes option-pricing model. The Company measures the fair value of restricted stock units based on the market value of the underlying shares at the date of grant. The Company records the resulting expense in the consolidated statements of operations using the straight-line method over the period of service required to vest in the award, which is generally two to four years. The Company accounts for forfeitures as they occur. The Company also grants options to restricted shares to certain employees and directors. The Company measures options to restricted shares based on the estimated grant date fair values, which the Company determines using the Monte Carlo simulation model implemented in a risk-neutral valuation framework. The Company records the resulting expense in the consolidated statements of operations using the straight-line method over the period of service required to vest in the award, which is generally two to four years. The Company accounts for forfeitures as they occur. Income Taxes The Company uses the liability method of accounting for income taxes, which requires the recognition of deferred tax assets and deferred tax liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the deferred tax assets and liabilities are determined based on the differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates and laws expected to apply to taxable income when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Deferred tax assets and deferred tax liabilities are presented under other assets and income tax payable and other tax liabilities, respectively. ASC 740, “Income Taxes” (“ASC 740”) states that a tax benefit from an uncertain tax position may be recognized (1) when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is more than 50 percent (on a cumulative basis) likely to be realized upon ultimate settlement with the related tax authority. The Company records unrecognized tax benefits as liabilities in accordance with ASC 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from management’s current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. Basic and Diluted Net Income (Loss) per Ordinary Share The Company calculates net income (loss) per share using the two-class method required for participating securities. The two- class method requires income (loss) available to ordinary shareholders for the period to be allocated between ordinary shares and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s redeemable convertible preferred shares contractually entitle the holders of such shares to participate in distribution but does not contractually require the holders of such shares to participate in the Company’s losses. Accordingly, for the periods where the Company is in a net loss position, the Company does not allocate any net loss attributable to ordinary shareholders to the redeemable convertible preferred shares. The Company calculates basic net income (loss) per share attributable to ordinary shareholders by dividing net income (loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period. The Company calculates diluted net income (loss) per share attributable to ordinary shareholders by dividing net income (loss) attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding after giving consideration to Table of Contents F-19
the dilutive effect of the redeemable convertible preferred shares, share options, and preferred shares warrants that are outstanding during the period. Noncontrolling Interests Noncontrolling interests represent the portion of equity in consolidated entities not attributable, directly or indirectly, to the Company. These interests are reported as a separate component of equity in the consolidated balance sheets. Net income or loss is attributed to both the Company and the noncontrolling interests in the Consolidated Statements of Operations. Comprehensive Income The Company accounts for comprehensive income in accordance with ASC 220, "Comprehensive Income". Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its items of other comprehensive income relate to unrealized gains and losses on available for sale investments. Unclassified Balance Sheet Effective for the quarterly period ended September 30, 2025, the Company has voluntarily changed its balance sheet presentation to an unclassified format. Management believes this change in accounting principle is preferable because it conforms the Company's financial reporting with the predominant practice of its peers within the financial technology industry and provides a presentation consistent with the financial metrics used to evaluate the business, thereby enhancing comparability and relevance for investors. In accordance with applicable accounting guidance, this change has been applied retrospectively to all prior periods presented. The change had no impact on previously reported total assets, total liabilities, stockholders' equity or results of operations. Emerging Growth Company Status The Company is considered a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act for filings beginning with this Annual Report, because on the last business day of the second quarter in 2025, the aggregate market value of the Company’s ordinary Class A shares held by non-affiliate shareholders exceeded $700 million. As a result, we ceased to be an emerging growth company as of December 31, 2025. Due to the loss of emerging growth company status, the Company is no longer be exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, and our independent registered public accounting firm evaluated and reported on the effectiveness of our internal controls over financial reporting in its report included in this Annual Report. The transition to large accelerated filer status subjected the Company to accelerated filing deadlines and additional disclosure requirements, which further aligned our reporting with other large US companies for even greater transparency. Reclassification Certain prior year amounts have been reclassified to conform to the current period presentation. The reclassification adjustments primarily relate to changes to the presentation of certain expenses in the consolidated statements of operations. Specifically, the Company has added new financial statement line items labeled “Gains and (losses) on investments in loans and securities” and “Gains and (losses) from extinguishment of debt” and reclassified the corresponding amounts from “General and administrative expenses” and “Other expenses, net” in the prior period financial statements to conform to the current period presentation. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require entities to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling items where the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income/loss by the applicable statutory income tax rate. In addition, entities are required to disclose the year-to-date amount of income taxes paid (net of refunds received) disaggregated by jurisdictions. The adoption of the guidance did not have a material impact on the Company’s financial statements but resulted in expanded disclosures in the Table of Contents F-20
Notes to the consolidated financial statements. The Company prospectively adopted the provisions of this ASU. See Note 16 for additional information. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40), Disaggregation of Income Statement Expenses, which requires disclosure of disaggregated information about certain expense captions presented in the consolidated statements of operations as well as disclosure about selling expense. The effective date for this update was amended by ASU 2025-01 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, and is now effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. It could be applied either prospectively or retrospectively. The Company is currently evaluating the impact of these amendments on its consolidated financial statement disclosures. In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326). The amendments in this update expand the use of the gross-up approach to certain acquired loans beyond purchased financial assets with credit deterioration. The new guidance is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The amendments in this update must be adopted prospectively to loans that are acquired on or after the initial application date. The Company is currently evaluating the impact of these amendments on its consolidated financial statement disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, to modernize the accounting guidance for the costs to develop software for internal use. The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile programming. Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The new standard also supersedes the guidance related to costs incurred to develop a website. ASU 2025-06 guidance is effective for annual periods beginning after December 15, 2027. The guidance can be applied on a prospective basis, a modified basis for in-process projects or on a retrospective basis. The Company is currently evaluating the impact of these amendments on its consolidated financial statement disclosures. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements. which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact of these amendments on its consolidated financial statement disclosures. NOTE 3 - BUSINESS COMBINATIONS Acquisition of Darwin Homes, Inc. On January 5, 2023 (“Darwin acquisition date”), the Company completed the acquisition of Darwin Homes, Inc. (“Darwin”), a leading real estate investment management platform based in Austin, Texas that offers a comprehensive, tech-enabled solution for acquiring, renovating, and managing single-family rental properties. Darwin is a wholly-owned subsidiary of the Company and the results of Darwin for the period from January 5, 2023 to December 31, 2023 are included in the Company’s results of operations for the year ended December 31, 2023. Pro forma results of operations have not been presented because the effects of the acquisition was not material to the Company's consolidated statements of operations. The Company acquired 100% of Darwin’s equity through an all-stock transaction with a market value of approximately $18 million as of the Darwin acquisition date. In addition to the purchase consideration, the Company also granted approximately $12 million of cash and equity awards to Darwin employees which are recognized as compensation expense over their requisite Table of Contents F-21
service periods. Acquisition related costs of $0.1 million were expensed as incurred and are included in general and administrative expenses in the consolidated statement of operations. Darwin Net Assets Acquired The assets acquired and liabilities assumed have been included in the consolidated financial statements as of the Darwin acquisition date. Total assets acquired included identified intangible assets of $5.1 million. The Company recognized an asset for goodwill, determined as the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed, that amounted to $10.9 million. Goodwill generated from this business combination is attributed to synergies between the Company's and Darwin's respective products and services. An assessment of the fair value of identified intangible assets and their respective lives as of the acquisition date are as follows: Estimated Useful Life Fair Value Trade name 2 $ 1,400 Developed technology 2 3,700 Total $ 5,100 Identified intangible assets in the table above are amortized on a straight-line basis over the estimated useful lives. The Company believes that the straight-line method of amortization is the most appropriate methodology as it is supported by the pattern in which the economic benefits of the intangible assets are consumed. Acquisition of Theorem Technology, Inc. On October 22, 2024 (“Theorem acquisition date”), the Company completed the acquisition of Theorem Technology, Inc. (“Theorem”), a Silicon Valley-based institutional asset manager focused exclusively on the consumer credit space, managing assets for global institutional investors since its founding in 2014. Theorem is a wholly-owned subsidiary of the Company and the results of Theorem for the period from October 22, 2024 to December 31, 2024 are included in the Company’s results of operations for the year ended December 31, 2024. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company's consolidated statements of operations. The Company acquired 100% of Theorem’s equity for approximately $17.5 million, consisting of $10.0 million cash and 504,440 of the Company’s Class A Ordinary Shares (valued at $7.5 million as of the closing date), with an additional estimated contingent consideration at fair value of $6.1 million to be paid in cash and/or the Company’s Class A Ordinary Shares based on achievement of certain performance objectives defined in the purchase agreement. Contingent consideration is remeasured at fair value through the consolidated statement of operations over the one-year performance period. As of December 31, 2025 and December 31, 2024, the fair value of the contingent consideration liability was $0.2 million and $6.1 million, respectively. Acquisition related costs of $0.1 million were expensed as incurred and are included in general and administrative expenses in the consolidated statement of operations. Theorem Net Assets Acquired The assets acquired and liabilities assumed have been included in the consolidated financial statements as of the Theorem acquisition date. Total assets acquired included identified intangible assets of $8.3 million. The Company recognized an asset for goodwill of $12.1 million, determined as the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed. Goodwill generated from this business combination is attributed to synergies between the Company's and Theorem's respective products and services. The goodwill is not expected to be deductible for income tax purposes. An assessment of the fair value of identified intangible assets and their respective lives as of the acquisition date are as follows: Estimated Useful Life Fair Value Investment management agreements 2 $ 6,200 Developed technology 3 1,800 Trade name 3 300 Total $ 8,300 Table of Contents F-22
Identified intangible assets in the table above are amortized on a straight-line basis over the estimated useful lives. The Company believes that the straight-line method of amortization is the most appropriate methodology as it is supported by the pattern in which the economic benefits of the intangible assets are consumed. NOTE 4 - REVENUE Revenue from fees is comprised of Network AI fees and Contract fees. Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. AI integration fees are earned for the creation and delivery of assets that comprise Network Volume. The Company utilizes multiple funding channels to enable the purchase of network assets from Partners, such as asset backed securitizations (“ABS”), and forward flow arrangements. Capital markets execution fees are earned from the market pricing of ABS transactions, as well as upon the execution of forward flow transactions, while contract fees are management, performance and similar fees. These fees are the result of agreements with customers and are recognized in accordance with FASB Accounting Standards Codification 606, “Revenue from Contracts with Customers” (“ASC 606”). Revenue is recognized in accordance with ASC 606 with revenue recorded on a gross basis when the Company is a principal in the transaction with customers, and recorded on a net basis when the Company is acting as an agent on behalf of another. The Company generally recognizes revenue on a gross basis because the Company is primarily responsible for integrating the various services fulfilled by Partners and is ultimately responsible to the Financing Vehicles for the fulfillment of the related services. To the extent the Company does not meet the criteria for recognizing revenue on a gross basis, the Company records revenue on a net basis. Network AI Fees Network AI fees, comprised of AI integration fees and capital markets execution fees, totaled $1,131.3 million, $916.1 million and $696.0 million for the year ended December 31, 2025, 2024 and 2023, respectively. The Company recognizes Network AI fees primarily at a point in time when the related performance obligation is satisfied and the payment term is generally 30 days. From time to time the Company may provide certain incentives to a customer. When the Company determines that an incentive is consideration payable, which is not in exchange for distinct goods or services, to a customer, the incentive is recorded as a reduction of revenue. Expenses to third parties for services that are integrated with the Company’s technology are recorded in the consolidated statements of operations as Production Costs. Contract Fees Contract fees include administration and management fees, performances fees, and servicing fees. Contract fees totaled $130.0 million, $88.5 million and $76.8 million for the year ended December 31, 2025, 2024 and 2023, respectively. All of these fees are recognized over the service period for the Financing Vehicles managed or administered by the Company and the payment term is monthly as a fixed percentage of the entity’s assets, except for the portion of management fees that are recognized at the point in time based on contract terms. The Company includes variable consideration in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur; to date, adjustments to these estimates have not resulted in a significant reversal of previously recognized revenue. Performance fees are earned when certain Fund Financing Vehicles exceed contractual return thresholds. They are recognized only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. An estimate is made by the Company based on a variety of factors including market conditions and expected loan performance. In the following period, the true performance is measured and then adjusted to ensure that the fees accurately represent actual performance of Financing Vehicles. As such, there are revenues that result from performance obligations satisfied in the previous year. During the year ended December 31, 2025, $1.0 million worth of fees were recognized, which represent performance obligations satisfied in the previous year that were greater than the original estimate. During the year ended December 31, 2024 and 2023, $2.5 million and $3.6 million respectively, worth of fees were reversed, which represent performance obligations satisfied in the previous year that were less than the original estimate. Servicing fees for the Financing Vehicles, which primarily involve collecting payments and providing reporting on the loans within the securitization vehicles, are recognized over the service period and the payment is received monthly from the Financing Vehicles. These duties have been considered to be agent responsibilities and does not include acting as a loan servicer. Accordingly, servicing fees are recorded on a net basis. Table of Contents F-23
Total Revenue From Fees The Company determines its contracts generally do not include a significant financing component since the Company's selling prices are not subjected to billing terms nor is its purpose to receive financing from its customers or to provide customers with financing. In addition, as a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between payment and the transfer of services is expected to be one year or less. Once revenue is recognized, it is recorded on the consolidated balance sheets in fees receivables until the payment is received from the customer. The timing of the recognition depends on the type of service as described above. Year Ended December 31, 2025 2024 2023 (in thousands) Services transferred at a point in time $ 1,120,513 $ 949,025 $ 734,924 Services transferred over time 140,828 55,525 37,890 Total revenue from fees, net $ 1,261,341 $ 1,004,550 $ 772,814 The timing of the revenue recognition may differ from the timing of payment from customers. The Company records a receivable when revenue is recognized prior to payment, and when the Company has an unconditional right to payment. The Company records a contract liability when payment is received prior to the time at which the satisfaction of the service obligation occurs. As of December 31, 2025, contract assets and contract liabilities from contracts with customers amounted to $13.0 million and $8.0 million, respectively, included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets. The Company had no material contract assets, contract liabilities, or deferred contract costs recorded as of December 31, 2024. See Note 7 for additional information. NOTE 5 - INVESTMENTS As of December 31, 2025 and 2024, our investments in loans and securities portfolio consisted of (i) investments held at fair value with changes in fair value recorded in unrealized non-credit related adjustments on available for sale securities, excluding the portion relating to any credit loss; (ii) investments in loans and securities held at fair value, with changes in fair value recorded in earnings, for which we elected the fair value option; and (iii) loans held for investment at amortized cost, less an allowance for potential uncollectible amounts. Below is a disaggregated presentation of our investments in loans and securities, including fair value adjustments, accrued interest income and net of the allowance for credit losses, as applicable (in thousands): Carrying Value December 31, 2025 December 31, 2024 Investments in securities, available for sale Securitization notes, available for sale (1) $ 395,717 $ 240,273 Securitization certificates, available for sale (1) 471,661 533,243 Total 867,378 773,516 Investments in loans and securities under the fair value option Securitization notes (1) 12,473 — Securitization certificates (1) 60,840 — Other loans 4,578 — Total 77,891 — Investments in loans, at amortized cost Other loans, at amortized cost — 4,893 Total investments in loans and securities $ 945,269 $ 778,409 Table of Contents F-24
(1) $504.3 million and $414.8 million were held by the Company for regulatory risk retention purposes as of December 31, 2025 and 2024, respectively. Investments in Securities Available for Sale The amortized cost, gross unrealized gains and losses and fair value of Investments in Securities Available for Sales (“AFS securities”) as of December 31, 2025 and 2024 were as follows (in thousands). The Company has determined that it is the primary beneficiary of certain VIEs that were established to purchase investments in Pagaya sponsored ABS notes and certificates. The portion of these consolidated VIEs that the Company does not own, is accounted for as noncontrolling interest in the consolidated financial statements. Refer to Note 6 for additional information. As of December 31, 2025 Investments in securities, available for sale(1): Amortized Cost Gross Unrealized Gains Gross Unrealized Non-Credit Related Adjustments Allowance for Credit Losses Fair Value Securitization notes $ 395,216 $ 970 $ (469) $ — $ 395,717 Securitization certificates 874,170 6,489 (23,120) (385,878) 471,661 Total $ 1,269,386 $ 7,459 $ (23,589) $ (385,878) $ 867,378 (1) Includes accrued interest receivable of $25.8 million. As of December 31, 2024 Investments in securities, available for sale(2): Amortized Cost Gross Unrealized Gains Gross Unrealized Non-Credit Related Adjustments Allowance for Credit Losses Fair Value Securitization notes $ 240,396 $ 386 $ (509) $ — $ 240,273 Securitization certificates 1,048,734 7,926 (14,676) (508,741) 533,243 Total $ 1,289,130 $ 8,312 $ (15,185) $ (508,741) $ 773,516 (2) Includes accrued interest receivable of $13.7 million, previously reported within “Fee receivables” as of December 31, 2024, has been reclassified to conform to the current period’s presentation. The following tables set forth the fair value and gross unrealized losses on investments in AFS securities without an allowance for credit losses aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, as of the dates indicated (in thousands): As of December 31, 2025 Less than or equal to 1 year Greater than 1 year Total Investments in securities, available for sale: Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Securitization notes $ 36,797 $ (442) $ 5,504 $ (27) $ 42,301 $ (469) As of December 31, 2024 Less than or equal to 1 year Greater than 1 year Total Investments in securities, available for sale: Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Securitization notes $ 66 $ (1) $ 27,295 $ (508) $ 27,361 $ (509) Table of Contents F-25
The following table sets forth the amortized cost and fair value of AFS securities by contractual maturities, as of the date indicated (in thousands): As of December 31, 2025 Within 1 year Greater than 1 year, less than or equal to 5 years Total Investments in securities, available for sale:(1): Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Securitization notes $ 15,279 $ 15,602 $ 379,938 $ 380,115 $ 395,217 $ 395,717 Securitization certificates 42,698 13,495 831,471 458,166 874,169 471,661 Total $ 57,977 $ 29,097 $ 1,211,409 $ 838,281 $ 1,269,386 $ 867,378 As of December 31, 2024 Within 1 year Greater than 1 year, less than or equal to 5 years Total Investments in securities, available for sale:(1)(2): Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Securitization notes $ 9,907 $ 9,903 $ 230,489 $ 230,370 $ 240,396 $ 240,273 Securitization certificates 11,554 11,554 1,037,180 521,689 1,048,734 533,243 Total $ 21,461 $ 21,457 $ 1,267,669 $ 752,059 $ 1,289,130 $ 773,516 (1) Based on contractual maturities of corresponding repurchase agreements. See Note 8 for additional information. (2) Includes accrued interest receivable of $13.7 million, previously reported within “Fee receivables” as of December 31, 2024, has been reclassified to conform to the current period’s presentation. The following table sets forth gross proceeds and related investment gains and losses, as well as losses on write-downs and the allowance for credit losses of AFS securities, for the periods indicated (in thousands): Year Ended December 31, 2025 2024 Investments in securities, available for sale: Proceeds from sales/maturities/prepayments $ 321,848 $ 242,285 Gross investment gains from sales (9,339) (7,922) Reductions (additions) to allowance for credit losses 122,863 (410,062) The following tables set forth the activity in the allowance for credit losses for AFS securitization certificates, as of the dates indicated (in thousands): Year Ended December 31, Investments in securitization certificates, available for sale: 2025 2024 Balance, beginning of period $ (508,741) $ (98,679) Additions to allowance on securities without a previous allowance (90,401) (347,189) Reductions for securities redeemed, prepaid or sold during the period 242,393 — Additions to allowance on securities with a previous allowance (29,129) (62,873) Balance, end of period $ (385,878) $ (508,741) Refer to Note 10 for additional information regarding the allowance for credit losses for investments. Investments in loans and securities, under the fair value option The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. We elected the fair value option to measure certain loans and securities, as we believe that fair value best reflects the economic transaction of investing in certain new loans and securities. We determined the fair value of Table of Contents F-26
certain loans and securities using a discounted cash flow methodology, while also considering market data as it became available. We record the initial fair value measurement and subsequent measurement changes in fair value in the period in which the changes occur within the gains and (losses) on investments in loans and securities in the consolidated statements of operations. We report the changes in fair value within (gains) and losses on investments in loans and securities in the consolidated statements of cash flow. The following table presents activities of investments in securities for which we elected the fair value option. See Note 10 for the assumptions used in our fair value model (in thousands): Year Ended December 31, Investments in securities under the fair value option 2025 2024 Balance, beginning of period $ — $ — Purchases 78,358 — Principal payments (27,313) — Change in fair value 22,268 — Balance, end of period (1) $ 73,313 $ — (1) The balance excludes $4.6 million of other loans accounted for under the fair value option. Refer to Note 10 for additional information regarding the discounted cash methodology used for investments in loans and securities for which we elected the fair value option Equity Method and Other Investments The following investments, including those accounted for under the equity method, are included within Equity method and other investments in the consolidated balance sheets as of December 31, 2025 and December 31, 2024 (in thousands): Carrying Value December 31, 2025 December 31, 2024 Investments in Pagaya SmartResi F1 Fund, LP (1) $ 8,324 $ 12,530 Other (2) 5,194 9,403 Total $ 13,518 $ 21,933 (1) The Company owns approximately 5.4% and is the general partner of Pagaya Smartresi F1 Fund LP. (2) Represents the Company’s proprietary investments. Income (loss) from these investments is included in Investment (loss) income in the consolidated statements of operations. NOTE 6 - CONSOLIDATION AND VARIABLE INTEREST ENTITIES The Company has variable interests in securitization vehicles that it sponsors. The Company consolidates VIEs when it is deemed to be the primary beneficiary. In order to be primary beneficiary, the Company must have a controlling financial interest in the VIE. This is determined by evaluating if the Company has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant. Consolidated VIEs As of December 31, 2025 and December 31, 2024, the Company determined that it is the primary beneficiary of Pagaya Structured Holdings LLC, Pagaya Structured Holdings II LLC, and Pagaya Structured Holding III LLC (“Risk Retention Entities”). These entities were established by Pagaya to purchase investments in ABS notes and certificates issued by Pagaya- sponsored ABS entities. Pagaya owns a 20% interest in these entities, and the remaining 80% ownership shares are held by affiliate entities. As these entities are consolidated, we present 100% of the assets and liabilities on our consolidated balance sheets. The 80% ownership interest not owned by the Company in each of these consolidated VIEs is accounted for as a noncontrolling interest in the consolidated balance sheets. Any income or loss associated with the consolidated VIEs’ activities is reported within the corresponding line items of the consolidated statements of operations, with the results of the 80% ownership interest not owned by the Company presented as net income (loss) attributable to noncontrolling interests. Table of Contents F-27
As sponsor of securitization transactions, the Company is subject to risk retention requirements and established the Risk Retention Entities to meet these requirements. Below is a summary of assets and liabilities from the Company’s involvement with consolidated VIEs (i.e., Risk Retention Entities) (in thousands): Assets(1) Liabilities Net Assets As of December 31, 2025 $ 93,404 $ — $ 93,404 As of December 31, 2024 $ 142,584 $ — $ 142,584 (1) Assets comprised of the note and certificates to comply with risk retention requirements. Unconsolidated VIEs The Company determined that it is not the primary beneficiary of the trusts which hold the loans and issue securities associated with the securitization transactions the Company sponsors. The Company does not have the power to direct or control the activities which most significantly affect the performance of the trusts, which was determined to be servicing loans. The Company’s maximum exposure to loss from its involvement with unconsolidated VIEs represents the estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is remote, such as where the value of securitization notes and senior and residual certificates the Company holds as part of the risk retention requirement declines to zero. Below is a summary of the Company’s direct interest in (i.e., not held through Risk Retention Entities) variable interests in nonconsolidated VIEs (in thousands): Carrying Amount Maximum Exposure to Loss VIE Assets As of December 31, 2025 $ 847,290 $ 847,290 $ 13,070,284 As of December 31, 2024 $ 628,038 $ 628,038 $ 10,708,146 From time to time, the Company may, but is not obligated to, purchase assets from the Financing Vehicles. Such repurchases can occur at the Company’s discretion, subject to contractual requirements and limitations. See Note 17 for additional information. NOTE 7 - BALANCE SHEET COMPONENTS Property, equipment and software, net Property, equipment and software, net, consist of the following as of December 31, 2025 and 2024 (in thousands): December 31, December 31, 2025 2024 Internal-use software $ 101,945 $ 85,808 Computer and software 6,860 5,406 Furniture and equipment 938 878 Leasehold improvements 1,112 1,080 Property, equipment and software, gross 110,855 93,172 Less: accumulated depreciation and amortization (80,634) (55,198) Property, equipment and software, net $ 30,221 $ 37,974 The Company capitalized $16.1 million, $24.3 million and $28.1 million, of internally developed costs during the year ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and December 31, 2024, internally developed software costs balances, included in property, equipment and software, net, are $27.8 million and $36.1 million, respectively. Depreciation and amortization expense was $30.1 million, $28.8 million and $19.1 million for the year ended December 31, 2025, 2024 and 2023, respectively. Table of Contents F-28
During each of the year ended December 31, 2025, 2024 and 2023, the Company wrote off certain internally developed software, and reported $0.5 million, $3.2 million, $2.5 million, respectively, of impairment loss in the consolidated statements of operations. No impairment losses related to property, equipment and software were recorded during the year ended December 31, 2025, 2024 and 2023. Intangible Assets Acquired intangible assets subject to amortization consist of investment management agreements, license, developed technology and trade name are recorded net of amortization and included within intangible assets on the consolidated balance sheets. The gross and net carrying values and accumulated amortization are as follows (in thousands): December 31, 2025 December 31, 2024 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Investment management agreements $ 6,200 $ (3,014) $ 3,186 $ 6,200 $ (387) $ 5,813 License 5,500 (2,292) 3,208 5,500 (458) 5,042 Developed technology 5,500 (4,413) 1,087 5,500 (3,813) 1,687 Trade name 1,700 (1,520) 180 1,700 (1,421) 279 Total intangible assets $ 18,900 $ (11,239) $ 7,661 $ 18,900 $ (6,079) $ 12,821 Amortization expense was and $5.2 million, $3.5 million and $2.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Expected future amortization expense for intangible assets is as follows (in thousands): December 31, 2025 2026 $ 5,719 2027 1,942 Total $ 7,661 Other assets Table of Contents F-29
Other assets, consist of the following as of December 31, 2025 and 2024 (in thousands): December 31, December 31, 2025 2024 Prepaid expenses $ 6,930 $ 7,557 Related party assets (1) 42,558 14,637 Other assets 4,677 4,171 Total other assets $ 54,165 $ 26,365 (1) Related party assets include $13.0 million of contract assets as of December 31, 2025. No such contract assets existed as of December 31, 2024. Accrued expenses and other liabilities Accrued expenses and other liabilities consist of the following as of December 31, 2025 and 2024 (in thousands): December 31, December 31, 2025 2024 Employee payables $ 17,381 $ 16,327 Related party payables (1) 10,610 2,969 Interest payables 22,896 7,171 Contingent consideration from the Theorem acquisition 183 6,090 Other liabilities 23,565 12,805 Total accrued expenses and other liabilities $ 74,635 $ 45,362 (1) Related party payables include $8.0 million of contract liabilities as of December 31, 2025. No such contract liabilities existed as of December 31, 2024. NOTE 8 - BORROWINGS The following table sets forth the Company’s outstanding borrowings as of the date indicated (in thousands): December 31, 2025 December 31, 2024 Secured borrowing $ 193,892 $ 176,089 Exchangeable notes $ 148,782 $ 146,342 Long-term debt $ 481,598 $ 321,317 The Company was in compliance with all covenants as of December 31, 2025 and December 31, 2024. Secured Borrowing Secured borrowings are comprised of risk retention master repurchase agreements and receivable facilities. Interest expenses related to secured borrowings totaled $22.2 million for the year ended December 31, 2025, compared to $47.1 million for the year ended December 31, 2024. During the third quarter of 2025, the Company has repaid $153.9 million of secured borrowing, following the issuance of the 2030 Notes. As a result of these transactions, the Company has incurred a loss of $1.4 million related to the write-off of deferred issuance costs reported within “Gains and (losses) from extinguishment of debt” in the consolidated statements of operations. The following table sets forth the Company’s outstanding secured borrowings as of the date indicated (in thousands, except percentage): Table of Contents F-30
December 31, 2025 December 31, 2024 Outstanding Balance Interest Rate (1) Outstanding Balance Interest Rate (1) Risk Retention Master Repurchase - Recourse $ 53,722 13% $ 115,298 17% Risk Retention Master Repurchase - Non-Recourse 53,584 6% 28,987 7% Receivables Facility - Recourse 22,427 8% — —% Receivables Facility - Non-Recourse 64,159 6% 31,804 8% Total principal balance under secured borrowings $ 193,892 $ 176,089 (1) The interest rate is weighted based on the outstanding principal balance and interest rates in effect as of December 31, 2025 and 2024 Risk Retention Master Repurchase In normal course of business, the Company, through consolidated VIEs, enters into repurchase agreements to finance the Company’s risk retention balance in notes and certificates retained from securitization transactions. Under these agreements, the Company pledges financial instruments as collateral. These agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities owned that can be sold or repledge by the counterparty are included in Investments in loans and securities in our balance sheet. As of December 31, 2025 and December 31, 2024, the outstanding principal balance under the repurchase agreements was $107.3 million and $144.3 million, respectively, with a weighted average interest rate of approximately 10% and 15%, respectively. The average remaining contractual maturities of the repurchase agreements were greater than 90 days as of both December 31, 2025 and December 31, 2024. Receivables Facility In April 2025, Pagaya Structured Products LLC, a wholly-owned subsidiary of the Company, entered into a Loan and Security Agreement (the “LSA Agreement”) with certain lenders. This agreement established a 24-month Capitalized Interest Amounts Facility (the “CIA Facility”) with a maximum principal amount of $24 million to finance eligible capitalized interest amounts related to sponsored securitization transactions. Additionally, in June 2025, Pagaya Structured Products LLC entered into a 30- month Accrued Loan Purchasing Fee Receivables Facility (the “ALPF Facility”) with a maximum principal amount of $65 million, to finance certain eligible receivables from sponsored securitization transactions. Borrowings under the CIA Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 4.00%, while borrowings under the ALPF Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 1.9%. As of December 31, 2025, the combined outstanding principal balance under the CIA Facility and ALPF Facility was $86.6 million, which is recorded within secured borrowing on the consolidated balance sheets. In June 2025, Pagaya Receivables LLC, a wholly-owned subsidiary of the Company, repaid the outstanding balance of a 3-year loan facility (the “SVB Receivables Facility”) and terminated the related Loan and Security Agreement, which was originally executed in October 2022. Borrowings under the SVB Receivables Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 0.00% floor) plus a margin of 3.50%. As of December 31, 2024, the outstanding principal balance under the SVB Receivable Facility was $31.8 million, which is recorded within secured borrowing on the consolidated balance sheets. As of December 31, 2025, there was no outstanding balance under the SVB Receivable Facility, and the facility was no longer in effect. Exchangeable Notes On October 1, 2024, the Company, through a wholly owned subsidiary of the Company, issued $160 million aggregate principal amount of its 6.125% Exchangeable Notes due 2029 (the “2029 Notes”). The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers. The 2029 Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025. The 2029 Notes will mature on October 1, 2029, unless earlier repurchased, redeemed, or exchanged. The initial exchange rate of the 2029 Notes is 71.4669 Class A Ordinary Shares per $1,000 principal amount of 2029 Notes (equivalent to an initial exchange price of approximately $13.99 per Class A Ordinary Share). The exchange rate is subject to customary adjustments upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events that constitute a “make-whole fundamental change” (as defined in the 2029 Notes Indenture) Table of Contents F-31
occur, then the Company will, in certain circumstances, increase the exchange rate for 2029 Notes exchanged during a specified period of time. Prior to the close of business on the business day immediately preceding July 2, 2029, the 2029 Notes will be exchangeable at the option of the holders only upon the satisfaction of one or more specified conditions. These conditions include, among others, the sale price of the Class A Ordinary Shares exceeding 130% of the initial exchange price for a specified number of trading days (such condition, the “Sales Price Contingent Exchange Condition”). On or after July 2, 2029 until the close of business on the second scheduled trading day immediately preceding October 1, 2029, the 2029 Notes will be exchangeable at the option of the holders at any time regardless of the specified conditions. During the third quarter of 2025, the Sales Price Contingent Exchange Condition was met as the closing sale price of the Company’s Class A Ordinary Shares exceeded 130% of the exchange price for the required period and, as a result, noteholders have been entitled to exchange their 2029 Notes. As of December 31, 2025, no holders have elected to exchange their 2029 Notes. The 2029 Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the option of the Company at any time, and from time to time, on or after October 5, 2027 and on or before the 41st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the 2029 Notes are “Freely Tradable” (as defined in the 2029 Notes Indenture), and all accrued and unpaid additional interest, if any, has been paid in full as of the first interest payment date occurring on or before the related “Redemption Notice Date” (as defined in the 2029 Notes Indenture); and (ii) the last reported sale price per Class A Ordinary Share exceeds 130% of the exchange price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the related Redemption Notice Date; and (2) the trading day immediately before the Redemption Notice Date. However, the Company may not redeem less than all of the outstanding 2029 Notes unless at least $50.0 million aggregate principal amount of 2029 Notes are outstanding and not called for redemption as of the related Redemption Notice Date. In addition, calling any 2029 Note for redemption will constitute a make-whole fundamental change with respect to such 2029 Note called for redemption, in which case the exchange rate applicable to the exchange of such 2029 Note called for redemption will be increased in certain circumstances if it is exchanged during the related “Redemption Exchange Period” (as defined in the 2029 Notes Indenture). If the Company undergoes a “Fundamental Change” (as defined in the 2029 Notes Indenture), subject to certain conditions and except as set forth in the Indenture, holders may require the Company to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Company accounted for the issuance of the 2029 Notes as a single liability at par as the conversion feature does not require bifurcation as a derivative under ASC 815 and the 2029 Notes were not issued at a substantial premium. Debt issuance costs, consisting of underwriting fees and third-party offering costs, totaled $6.2 million. Original Issue Discount (“OID”) totaled $8.0 million. Both issuance costs and OID are amortized to interest expense using the effective interest method over the contractual term of the 2029 Notes. For year ended December 31, 2025 and 2024, the Company recorded $12.4 million and $3.1 million of interest expense, respectively, which included $2.4 million and $0.6 million related to the amortization of debt issuance costs and OID. The effective interest rate of the 2029 Notes is 8.7%. The estimated fair value of the 2029 Notes as of December 31, 2025 and December 31, 2024 was approximately $292.4 million and $163.4 million, respectively, which represent Level 2 valuations in the fair value hierarchy. The estimated fair value was determined based on the estimated or actual bids and offers of the 2029 Notes in an over-the-counter market. Long-Term Debt Senior Notes On July 28, 2025, the Company, through Pagaya US Holding Company LLC (“Pagaya US”), issued $500 million aggregate principal amount of 8.875% Senior Unsecured Notes due 2030 (the “2030 Notes”). The 2030 Notes will accrue interest at a rate of per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2026. The 2030 Notes will mature on August 1, 2030, unless earlier repurchased or redeemed. Table of Contents F-32
The 2030 Notes will be redeemable at the option of the Company. At any time prior to August 1, 2027, the Company may redeem the 2030 Notes, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the 2030 Notes plus a make-whole premium described in the 2030 Notes Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. On and after August 1, 2027, the Company may redeem the 2030 Notes, in whole or in part, at the redemption prices set forth in the 2030 Notes Indenture. The following table details the Company’s 2030 Notes as of December 31, 2025 (in thousands): December 31, 2025 Principal amount $ 493,085 Less: Unamortized issuance costs (11,487) Carrying amount $ 481,598 The Company recorded $20.3 million of interest expense, including $1.1 million of amortization of debt issuance costs, for the three months ended December 31, 2025. In December 2025, the Company repurchased $6.9 million aggregate principal amount of the outstanding 2030 Notes at a price equal to 87.4% of the principal amount. The Company paid total consideration of $6.0 million, excluding accrued interest, resulting in a $0.7 million net gain on extinguishment of debt. This gain is net of the written-off carrying value, which included associated pro rata unamortized debt issuance costs, is reported within “Gains and (losses) from extinguishment of debt” in the consolidated statements of operations. Following the repurchase, the remaining aggregate principal amount of the 2030 Notes outstanding was $493.1 million as of December 31, 2025. Credit Agreement On February 2, 2024, the Company entered into a certain Credit Agreement (the “Credit Agreement”) which provides for a 5- year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million. Borrowings under the Facilities bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to a 2.00% floor) plus a margin of 6.50% or (ii) an adjusted term Secured Overnight Financing Rate (subject to a 1.00% floor) plus a margin of 7.50%. In November 2024, the Company entered into Amendment No. 2 (the “Amendment”) to the Credit Agreement. Pursuant to the Amendment, the Company incurred incremental term loans in an aggregate principal amount $100 million, bringing the total principal amount of the Term Loan Facility to $355 million. The Company also increased an aggregate principal amount of the Revolving Credit Facility of $15 million, bringing the total principal amount of the Revolving Credit Facility to $50 million. In February 2025, the Company further increased the aggregate principal amount of the Revolving Credit Facility by $8 million, resulting in a total principal amount of $58 million. As of December 31, 2024, the Company had letters of credit issued in the amount of $24.3 million and $25.7 million of remaining capacity available under the Revolving Credit Facility. In July 2025, the Company fully paid off the outstanding principal balance under the Credit Agreement using the proceeds from the issuance of the 2030 Notes, as discussed above. As a result of this transaction and the repayment of outstanding balance under the Credit Agreement, the Company has incurred a loss of $23.9 million during the year ended December 31, 2025, related to the write-off of deferred issuance costs and an early payment penalty, reported within “Gains and (losses) from extinguishment of debt” in the consolidated statements of operations. As of December 31, 2025, there was no outstanding balance under the Credit Agreement, and the Credit Agreement was no longer in effect. 2025 Revolving Credit Facility On October 1, 2025, the Company refinanced the Revolving Credit Facility by way of terminating Credit Agreement and entering into a new three-year revolving credit facility (the “2025 Revolving Credit Facility”) with a syndicate of financial institutions. The 2025 Revolving Credit Facility provides a committed borrowing capacity of $132 million. Borrowings under the 2025 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to 1.00% floor) plus a margin of 2.50% and (ii) an adjusted term SOFR (subject to 1.00% floor) plus a margin of 3.50%, a reduction from the prior revolving credit facility’s rate of SOFR plus 7.50%. A commitment fee accrues on any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions. Table of Contents F-33
As of December 31, 2025, the Company had letters of credit issued in the amount of $115.9 million and $16.1 million of remaining capacity available under the 2025 Revolving Credit Facility. NOTE 9 - WARRANT LIABILITY Following the 1-for-12 reverse share split effective March 2024, each warrant entitles the holder to purchase 1/12 of a Class A Ordinary Share (or equivalently, 12 warrants are required to obtain 1 Class A Ordinary Share), and the redemption trigger prices described below have been adjusted accordingly. Public Warrants — Public Warrants may only be exercised for a whole number of shares. The Public Warrants became exercisable on July 22, 2022. The Public Warrants will expire on June 22, 2027 or upon liquidation. The Company will not be obligated to deliver any Class A ordinary shares, no par value (“Class A Ordinary Shares”), of the Company pursuant to the exercise of a public warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A Ordinary Shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No public warrant will be exercisable, and the Company will not be obligated to issue a Class A Ordinary Share upon exercise of a public warrant unless the Class A Ordinary Share, issuable upon such warrant exercise, has been registered, qualified, or deemed to be exempt under the securities laws of the state of residence of the registered holder of the public warrants. Redemption of Public Warrants for Cash The Company may redeem the outstanding warrants: • if, and only if, the closing price of the Class A Ordinary Shares equals or exceeds $216.00 per share (as adjusted for the reverse share split) for any 20 trading days within a 30 trading day period ending three business days before the Company sends the notice of redemption to the warrant holders; • in whole and not in part; • at a price of $0.01 per warrant; and • upon not less than 30 days’ prior written notice of redemption to each warrant holder. If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of Public Warrants when the per share price of Class A Ordinary Shares equals or exceeds $120.00 The Company may redeem the outstanding warrants: • if, and only if, the last reported sale price of the Class A Ordinary Shares equals or exceeds $120.00 per share (as adjusted for the reverse share split) for any 20 trading days within a 30 trading-day period ending on, and including, the third trading day prior to the date on which we send the notice of redemption to the warrant holders; • in whole and not in part; and • for cash at a price of at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their public warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table included in the Warrant Agreement, based on the redemption date and the “fair market value” of the Class A Ordinary Shares as described in the Warrant Agreement. If the Company calls the Public Warrants for redemption as described above under “—Redemption of Public Warrants for Cash,” management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the Warrant Agreement. The exercise price and number of Class A Ordinary Shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger, or consolidation. However, except as described below, the warrants will not be adjusted for issuance of Class A Ordinary Shares at a price below its exercise price. Additionally, in no event will the Company be required to net-cash settle the warrants. These warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liability on the consolidated balance sheets. The warrant liability is measured at fair value at inception and on a recurring basis, with changes in fair value presented within other expenses, net in the consolidated statements of operations. Table of Contents F-34
NOTE 10 - FAIR VALUE MEASUREMENT FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, when available. If such quoted market prices are not available, fair value is based upon a discounted cash flow model that uses, as inputs, observable market-based parameters to the greatest extent possible. The Company determines the fair value of its financial instruments and conducts an ongoing assessment of the techniques used to ensure their appropriateness, consistent application and the reasonableness of the assumptions. In determining the fair value of each investment security and loan, the Company reviews performance characteristics of the underlying loan pool including origination vintage, borrower credit quality, macroeconomic environment, etc. The Company determines the fair value for each investment security and loan by then estimating significant assumptions including discount rate, cumulative net loss rate and prepayment rate which are reviewed and approved by management. The Company also engages a third-party valuation service provider to estimate a range of fair values for all significant investments in loans and securities. The Company reviews and validates its significant assumptions with reference to historical performance and expectations of future performance including: discount rate, cumulative net loss rate and prepayment rate. Finally, the Company reviews and validates that the fair value used for financial reporting is within the range of fair value estimates by the third-party service provider for the same significant investment in loans and securities. Financial instruments are categorized in the fair value hierarchy based on the significance of unobservable inputs and assumptions in the overall fair value measurement. Financial instruments classified as Level 3 within the fair value hierarchy do not trade in an active market with readily observable prices. Accordingly, the Company uses significant unobservable inputs to measure the fair value of these assets. The Company has determined that its certificates, loans and certain subordinated notes meet the definition of Level 3 assets, as their fair value measurements are characterized by a lack of observable market data and a reliance on management's assumptions. Financial Assets and Liabilities Recorded at Fair Value The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Total Assets: Investments in loans and securities (Notes) $ — $ 67,715 $ 340,475 $ 408,190 Investments in loans and securities (Certificates) — — 532,501 532,501 Investments in loans and securities (Loans) — — 4,578 $ 4,578 Liabilities: Warrant liability $ 4,723 $ — $ — $ 4,723 Other liabilities (1) — — 13,112 13,112 December 31, 2024 Level 1 Level 2 Level 3 Total Assets: Investments in loans and securities (Notes) (2) $ — $ 115,220 $ 125,053 $ 240,273 Investments in loans and securities (Certificates) (2) — — 533,243 533,243 Liabilities: Warrant liability $ 890 $ 3 $ — $ 893 Other liabilities (1) — — 6,090 6,090 (1) Included in “Accrued expenses and other liabilities” in the consolidated balance sheets. See Note 15 for additional information. Table of Contents F-35
(2) Accrued interest receivable of $14.3 million, previously reported within “Fee receivables” as of December 31, 2024, has been reclassified to conform to the current period’s presentation. Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 1 and 2) Warrant liability (Level 1 and 2) The Company used the value of the Public Warrants (Level 1) as an approximation of the value of the Private Warrants as they are substantially similar to the Public Warrants, but not directly traded or quoted on an active market. The following tables summarize the Warrant liability activity for the year ended December 31, 2025, 2024 and 2023 (in thousands): Balance as of December 31, 2023 $ 3,242 Change in fair value (2,349) Balance as of December 31, 2024 $ 893 Change in fair value 3,830 Balance as of December 31, 2025 $ 4,723 Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 3) Investments in Loans and Securities (Level 3) As of December 31, 2025, investments in loans and securities categorized as level 3 investments include loans and securities under the fair value option and securities classified as available for sale which are measured at fair value on a recurring basis. These assets are measured at fair value using a discounted cash flow model, and presented within investments in loans and securities on the consolidated balance sheets. The estimate of fair value of these investments requires significant judgment. The Company uses a discounted cash flow model to estimate the fair value of these investments based on the present value of estimated future cash flows. The cash flow model uses unobservable inputs and reflects management's best estimates of the assumptions a market participant would use to calculate fair value of the particular investment. Primary inputs that require significant judgment include discount rates, net credit loss expectations, expected prepayment rates and consideration of any optional redemption features in the Company's investments. For securities classified as available for sales, changes in the fair value, other than declines in fair value due to credit, are reflected in other comprehensive income (loss) on the consolidated statements of comprehensive loss. Declines in fair value due to credit are reflected in gains and (losses) on investments in loans and securities on the consolidated statements of operations. For loans accounted for under the fair value options, all changes in fair value are recognized in the period in which they occur within the gains and (losses) on investments in loans and securities in the consolidated statements of operations. The following tables summarize the activity related to the fair value of the investments in loans and securities for the year ended December 31, 2025 and 2024 (in thousands): Table of Contents F-36
Balance as of December 31, 2023 $ 624,073 Transfer from level 2 10,469 Additions 607,398 Cash received (180,567) Gain on sale of investments in loans and securities 7,920 Change in accrued interest on investments 12,921 Change in fair value (13,858) Credit-related impairment loss (410,060) Balance as of December 31, 2024 $ 658,296 Transfer from level 2 42,577 Additions 550,154 Cash received (294,467) Gain on sale of investments in loans and securities 12,417 Loss on sale of investments in loans and securities (26,836) Change in accrued interest on investments 40,083 Change in fair value (9,746) Credit-related impairment loss (94,924) Balance as of December 31, 2025 $ 877,554 Significant unobservable inputs used for our Level 3 fair value measurement of the securities are the discount rate, net credit loss rate, prepayment rate and consideration of any optional redemption features in our investment securities. The discount rate reflects management’s estimate of the market-required return for similar financial instruments, to convert estimated future cash flows to a present value. The net credit loss rate is management’s estimate of potential loans losses, net of recoveries, from borrower defaults. The prepayment rate estimate is the proportion of principal received in advance of the contractual terms of the loan, which can impact the future interest cash flows of the investments and the investments expected duration. Because these inputs represent increased risk or accelerated capital return, they maintain an inverse relationship with valuation; accordingly, an increase in the discount, credit risk, or prepayment rates, in isolation, would result in a lower fair value measurement.The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the securities as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Unobservable Input Minimum Maximum Weighted Average Minimum Maximum Weighted Average Discount rate 5.0 % 15.0 % 15.0 % 5.0 % 15.0 % 15.0 % Loss rate 4.9 % 33.1 % 17.0 % 5.8 % 34.1 % 19.5 % Prepayment rate 0.0 % 40.0 % 14.2 % — % 40.0 % 9.4 % Financial Assets and Liabilities Not Recorded at Fair Value The Company believes that the carrying amount of cash, cash equivalents and restricted cash, fees receivables, accounts payables and other current liabilities approximate their fair value due to the short-term maturities of these instruments. The below tables contain information about assets that are not measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in thousands): Table of Contents F-37
December 31, 2025 Fair Value Carrying Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents, and restricted cash and cash equivalents $ 288,349 $ 288,349 $ — $ — $ 288,349 Fees receivables 153,250 — 69,864 83,386 153,250 Liabilities: Secured borrowings $ 193,892 $ — $ — $ 191,983 $ 191,983 Exchangeable notes 148,782 — 292,445 — 292,445 Long-term debt 481,598 — 430,616 — 430,616 December 31, 2024 Fair Value Carrying Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents, and restricted cash and cash equivalents $ 226,518 $ 226,518 $ — $ — $ 226,518 Fees receivables (1) 127,114 — 63,143 63,971 127,114 Investments in loans and securities (Loans) 4,893 — — 4,893 4,893 Liabilities: Secured borrowings $ 176,089 $ — $ — $ 177,554 $ 177,554 Exchangeable notes 146,342 — 163,360 — 163,360 Long-term debt 321,317 — — 366,396 366,396 (1) Accrued interest receivable of $14.3 million, previously reported within “Fee receivables” as of December 31, 2024, has been reclassified to “Investment in loans and securities” to conform to the current period’s presentation. NOTE 11 - ORDINARY SHARES AND ORDINARY SHARE WARRANTS As of December 31, 2025, 839,999,998 shares with no par value are authorized, of which, 6,666,666 shares are designated as Preferred Shares, 666,666,666 shares are designated as Class A Ordinary Shares, and 166,666,666 shares are designated as Class B Ordinary Shares. As of December 31, 2025, the Company had 2,027,147 Preferred Shares outstanding, 70,747,357 Class A Ordinary Shares outstanding and 11,288,577 Class B Ordinary Shares outstanding. The rights of the holders of each class of Ordinary Shares are identical, except with respect to voting. Each share of Class A Ordinary Share is entitled to one vote per share. Each share of Class B Ordinary Share is entitled to 10 votes per share. Shares of Table of Contents F-38
Class B Ordinary Share may be converted at any time at the option of the stockholder and automatically convert upon sale or transfer to Class A Ordinary Share. As of December 31, 2025 and 2024, the Company had reserved ordinary shares for future issuance as follows: December 31, 2025 December 31, 2024 Share options 3,197,713 4,042,901 Options to restricted shares 19,884,985 19,948,408 RSUs 2,150,173 3,009,918 Ordinary share warrants 2,076,008 2,372,858 Redeemable convertible preferred shares 2,027,147 5,000,000 Exchangeable notes 11,434,704 11,434,704 Shares available for future grant of equity awards(1) 9,836,203 8,121,438 Shares reserved for issuance under the ESPP 733,470 832,713 Total shares of ordinary share reserved 51,340,403 54,762,940 (1) Reflects the application of the automatic increase of shares reserved under the Company's 2022 Share Incentive Plan (the "2022 Plan") pursuant to the terms of the 2022 Plan. Ordinary Share Warrants The Company has accounted for the ordinary share warrants as equity-classified warrants as they met the requirements for equity classification under ASC 815, including whether the ordinary share warrants are indexed to the Company’s own ordinary shares. For warrants that do not meet all the criteria for equity classification, the warrants are recorded at their initial fair value on the date of issuance and remeasured each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash other income or expense in the accompanying consolidated statements of operations. As of December 31, 2025, there were 433,942 warrants expiring in March 2031 with an exercise price of $0.00006 per share, 192,900 warrants expiring in June 2030 with an exercise price of $0.0006 per share, 220,000 warrants expiring in March 2032 with an exercise price of $0.12 per share, and 1,229,166 warrants expiring in June 2027 with an exercise price of $138 per share. Redeemable Convertible Preferred Shares In May 2023, the Company issued 5,000,000 Preferred Shares at $15.00 per share (the “Original Issue Price”) to Oak HC/FT Partners V, L.P., Oak HC/FT Partners V-A, L.P. and Oak HC/FT Partners V-B, L.P for gross total proceeds of $75 million. For accounting purposes, upon issuance of the Preferred Share, the Company recorded $74.25 million ($75 million net of direct offering costs of $0.75 million) as mezzanine equity (temporary equity) on the consolidated balance sheets because it is contingently redeemable outside of the control of the Company. In September 2025, a total of 2,972,853 Preferred Shares were converted into 2,972,853 Class A Ordinary Shares at the option of the holders. This conversion resulted in a reduction of the Preferred Shares outstanding and a corresponding increase in the Company's Class A Ordinary Shares. The conversion was accounted for by reclassifying the carrying value of the converted Preferred Shares from mezzanine equity to permanent equity. Following this conversion, 2,027,147 Preferred Shares remain outstanding as of December 31, 2025. The terms and preferences of the preferred shares are summarized as follows: Conversion Features Each one Preferred Share shall be convertible into one Class A Ordinary Share at the option of the holder thereof, at any time. At any time on or after the sixth anniversary of the issuance of the Preferred Shares, if the Preferred Shares have not already been converted, if and only if so elected by the Company, all Preferred Shares that remain outstanding shall automatically convert, with each Preferred Share then outstanding converting into the following number of Class A Ordinary Shares, based on the volume weighted average trading price of the Class A Ordinary Shares for 30 trading days immediately preceding the date of a written notice to the holders of the Preferred Shares of the Company’s election to automatically convert all then outstanding Preferred Shares (“30-Day VWAP Average”): • if the 30-Day VWAP Average is equal to or greater than two times the Original Issue Price, one Class A Ordinary Share; or Table of Contents F-39
• if the 30-Day VWAP Average is less than two times the Original Issue Price but greater than 25% of the Original Issue Price, a number of Class A Ordinary Shares equal to (a) two times the Original Issue Price divided by (b) the 30-Day VWAP Average. If, based on the 30-Day VWAP Average, the value of a Preferred Share, on an as-converted basis, represents a return of the Original Issue Price ranging from a multiple of 3.5 to 2.5 of the Original Issue Price (“MOIP”) from the 2nd anniversary of the closing date to the 5th anniversary of the closing date, respectively, the Company shall have the right, but not the obligation, within five trading days thereafter, to notify the holders of the then outstanding Preferred Shares of the Company’s election to automatically convert without any further action by the holder thereof on the tenth trading day following the achievement of the MOIP, each Preferred Share then outstanding into one Class A Ordinary Share. Liquidation In the event of a Liquidation Event, the assets or proceeds available for distribution to the shareholders (the “Distributable Assets”) shall be distributed in the following order and preference: First, the holders of Preferred Shares then outstanding shall be entitled to receive, from the Distributable Assets, prior and in preference to any distribution in respect of the Ordinary Shares, an amount for each Preferred Share held by them (the “Preference Amount”) equal to the greatest of • (i) the sum of the Original Issue Price of such share plus an amount equal to 3.0% of the Original Issue Price for each full semi-annual period for which such Preferred Share has been outstanding (without compounding); • (ii) the amount such holder would actually receive for each Preferred Share if such Preferred Share had been converted into Ordinary Shares immediately prior to such Liquidation Event; or • (iii) two times the Original Issue Price. Second, after payment in full of the Preference Amount in respect of all Preferred Shares then outstanding, the remaining Distributable Assets, if any, shall be distributed on a pro-rata basis among the holders of Pagaya Ordinary Shares. In the event that the Distributable Assets are insufficient to pay in full the Preference Amount in respect of each Preferred Share then outstanding, then all of such Distributable Assets shall be distributed on a pari passu basis among the holders of the Preferred Shares in proportion to the respective full Preference Amount otherwise payable to such holders. Dividends Preferred Shares, Class A Ordinary Shares and Class B Ordinary Shares shall be treated equally and ratably, on a per share basis with respect to any dividend or distribution paid or distributed by the Company. As of December 31, 2025, the Company has not paid cash dividends and has no foreseeable plans to pay cash dividends in the future. Voting Each holder of Preferred Shares shall have one vote for each Ordinary Share into which the Preferred Shares held by such holder could be converted, as of the applicable record date set for the vote on any matter, whether the vote thereon is conducted by a show of hands, by written ballot or by any other means. Redemption Preferred Shares are not redeemable at the election of the holder, except that in the event of a change in control resulting from the sale or transfer of the Company’s securities, which qualifies as a Liquidation Event. The Company classifies its Preferred Shares as temporary equity because they may become redeemable due to certain change in control events that are outside the Company’s control, including a merger, acquisition, or sale of assets of the Company. The Company has not adjusted the carrying values of the Preferred Shares to its redemption value because redemption was not probable as of the balance sheet dates presented. The Company will adjust the carrying value of the Preferred Shares to its redemption value if redemption becomes probable in the future. Ordinary Share Offering On March 13, 2024, the Company priced an offering of 7,500,000 of its Class A Ordinary Shares, no par value, pursuant to an underwriting agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc. and Jefferies LLC as Table of Contents F-40
representatives of the several underwriters. The proceeds from the offer and sale of the securities are approximately $90.0 million, after deducting the underwriting discount and fees and offering expenses payable by the Company. NOTE 12 - SHARE BASED COMPENSATION Share Options—Granted share options expire at the earlier of termination of employment or ten years from the date of grant. Share options generally vest over four years of the employment commencement date or with 25% vesting on the twelve-month anniversary of the employment commencement date, and the remaining on a pro-rata basis each quarter over the next three years. Any options, which are forfeited or not exercised before expiration, become available for future grants. The following table summarizes the Company’s share option activity during the year ended December 31, 2025: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (000’s) Balance, December 31, 2024 4,042,901 $ 7.5 6.7 $ 7,335 Granted 2,500 9.7 Exercised (734,988) 7.2 Forfeited (112,700) 32.2 Balance, December 31, 2025 3,197,713 $ 6.7 5.7 $ 45,031 Vested and exercisable, December 31, 2025 2,647,978 $ 5.0 5.1 $ 41,795 The weighted-average grant date fair value of employee options granted, aggregate intrinsic value of options exercised, and fair value of share options vested for the year ended December 31, 2025 was $9.67, $9.6 million and $7.9 million, respectively. Share-based compensation expense is based on the grant-date fair value on a straight-line basis for graded awards with only service conditions, which is generally the option vesting term of four years. The fair value of each option on the date of grant is determined using the Black Scholes-Merton (BSM) option pricing model using the single-option award approach with the assumptions set forth in the table below. At December 31, 2025, unrecognized compensation expense related to unvested share options was approximately $5.6 million, which is expected to be recognized over a remaining weighted-average period of 1.3 years. Fair Value of Ordinary Shares—The fair value of each ordinary share was based on the closing price of the Company’s publicly traded ordinary shares as reported on the date of the grant. Expected Volatility—Expected volatility of share options was calculated based on the Company’s volatility as well as the implied volatilities from market comparisons of certain publicly traded companies and other factors. Risk-Free Interest Rate—The risk-free interest rate is determined using a U.S. Treasury zero-coupon bonds for the period that coincides with the expected term set forth. Expected Term— The expected term of share options represents the weighted average period the share options are expected to be outstanding. For option grants that are considered to be “plain vanilla”, the Company has opted to use the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time-to-vesting and the contractual life of the options. Expected Dividend Yield—The dividend yield is based on the Company’s historical and future expectation of dividends payouts. Historically, the Company has not paid cash dividends and has no foreseeable plans to pay cash dividends in the future. Table of Contents F-41
The assumptions used to estimate the fair value of share options granted for the year ended December 31, 2025 were as follows: 2025 Expected volatility 105.4 % Expected term (in years) 5.6 Risk free interest 4.1% Dividend yield 0.00 Restricted Stock Units (RSUs)—RSUs generally vest over two years of the employment commencement date with 50% vesting on the twelve-month anniversary of the employment commencement date, and the remaining on a pro-rata basis each quarter over the remaining twelve months. RSUs granted are forfeited at termination of employment. Any RSUs, which are forfeited or not exercised before expiration, become available for future grants. The following table summarizes the Company’s RSU activity during the year ended December 31, 2025: Number of RSUs Weighted Average Grant Date Fair Value Per Share Unvested at December 31, 2024 3,009,918 $ 12.0 Granted 2,662,406 13.6 Vested (2,838,979) 11.6 Forfeited (683,172) 11.9 Unvested at December 31, 2025 2,150,173 $ 14.5 At December 31, 2025, unrecognized compensation expense related to RSUs was approximately $24.9 million, which is expected to be recognized over a remaining weighted-average period of 0.8 years. Options to Restricted Shares In March 2021, the Company granted 18.7 million options to purchase restricted shares (the “First Awards”) at an exercise price of approximately $18.95 per share to certain directors and employees. These First Awards will vest upon the earlier of the following vesting conditions to occur of (i) a Transaction (defined as (a) a sale of all or substantially all assets or shares of the Company; or (b) a merger, consolidation, amalgamation or like transaction; or (c) a scheme of arrangement for the purpose of effecting such sale, merger, consolidation, amalgamation or other transaction) and (ii) Public Event (defined as an IPO or a SPAC) (each, a “Qualifying Event”). The Qualifying Event, further, contains additional market-based vesting conditions driven by the total value of the Company. The First Awards do not get accelerated upon any events. Any Awards that do not vest on such date (if such date is triggered by a Qualifying Event) will remain eligible for vesting following a Qualifying Event. However, any Awards that do not vest on or before the earlier to occur of a Transaction and the expiration date (10 years from the grant date) shall be forfeited. In December 2021, the Company granted 0.4 million options to purchase restricted shares (the “Second Awards”) at an exercise price of approximately $40.59 per share to certain directors. These Second Awards will vest upon the earlier of the following vesting conditions to occur of a Qualifying Event. The Second Awards do not get accelerated upon any events. Any Awards that do not vest on such date (if such date is triggered by a Qualifying Event) will remain eligible for vesting following a Qualifying Event. However, any Awards that do not vest on or before the earlier to occur of a Transaction and the expiration date (10 years from the grant date) shall be forfeited. In December 2021, the Company granted 0.6 million options to purchase restricted shares (the “Third Awards”) at an exercise price of approximately $37.38 per share to certain employees. These Third Awards will vest upon the following: (i) The Valuation-Based Vesting Condition may be satisfied at any date on or after March 31, 2022 based on the Total Value of the Company on such date (which shall be determined based on an independent third party valuation or, if the Company’s shares are publicly traded, based on the average trading price of a share of the Company over a period of sixty (60) days). Any options or shares received in connection with the exercise of an option that have not satisfied the Valuation-Based Vesting Condition on or prior to the tenth anniversary of the Grant Date (or such shorter period required by applicable law or for tax efficiency purposes) (the "Expiration Date") shall expire or be forfeited without consideration, as applicable, on the Expiration Date, and (ii) The Time-Based Vesting Condition shall be satisfied over a period of four (4) years commencing as of March 31, 2022, such that Table of Contents F-42
25% of the options shall vest and become exercisable on March 31, 2023, 25% shall vest and become exercisable on March 31, 2024, 25% shall vest and become exercisable on March 31, 2025 and the remaining 25% shall vest and become exercisable on March 31, 2026 (rounded to the nearest number at each vesting date). The following table summarized the Company’s options to restricted shares activity during the year ended December 31, 2025: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (000’s) Balance, December 31, 2024 19,948,408 $ 19.4 6.2 $ — Granted — Exercised (34,179) 15.3 Forfeited (29,244) 32.0 Balance, December 31, 2025 19,884,985 $ 19.3 5.2 $ 30,967 Vested and exercisable, December 31, 2025 16,539,026 $ 19.3 5.2 $ 26,643 At December 31, 2025, unrecognized compensation expense related to options to restricted shares was approximately $5.8 million, which is expected to be recognized over a remaining weighted-average period of 1.0 years. Employee Stock Purchase Plan—The Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of our Class A Ordinary Shares at a discounted price, normally through payroll deductions, subject to the terms of the ESPP and applicable law. During the year ended December 31, 2025, 99,243 shares were issued under the ESPP. As of December 31, 2025, 733,470 shares of Class A Ordinary Shares were reserved for issuance under the ESPP. Compensation expense related to the ESPP was $0.6 million for the year ended December 31, 2025. Share-Based Compensation Expense The following table presents the components and classification of share-based compensation for the year ended December 31, 2025, 2024 and 2023 (in thousands): 2025 2024 2023 Technology, data and product development $ 4,965 $ 8,695 $ 12,375 Selling and marketing 21,142 14,666 13,216 General and administrative 28,011 38,136 45,464 Total $ 54,118 $ 61,497 $ 71,055 NOTE 13 - EMPLOYEE BENEFITS Severance pay — Under Israeli employment laws, Israeli employees of the Company are included under Section 14 of the Severance Pay Law, 5723-1963 (“Section 14”). According to Section 14, these employees are entitled to monthly payments made by the Company on their behalf with insurance companies. For the year ended December 31, 2025, 2024 and 2023, the Company incurred severance related expenses of $3.0 million, $3.1 million and $3.1 million, respectively. Payments in accordance with Section 14 release the Company from any future severance payments with respect to those employees. The obligation to make the monthly deposits at a rate of 8.3% of their monthly salary is expensed as incurred. In addition, the aforementioned deposits are not recorded as an asset in the consolidated balance sheets, and there is no liability recorded as the Company does not have a future obligation to make any additional payments. NOTE 14 - LEASES The Company leases facilities under operating leases with various expiration dates through 2032. The Company leases office space in New York and Israel. Table of Contents F-43
The security deposits for the leases are $1.9 million and $3.3 million as of December 31, 2025 and December 31, 2024, respectively, which have been recognized as restricted cash and cash equivalents in the consolidated balance sheets. The Company’s operating lease expense consists of rent and variable lease payments. Variable lease payments such as common area maintenance were included in operating expenses. Rent expense for the Company’s short-term leases was immaterial for the periods presented. Operating lease expense was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Rent expense $ 11,191 $ 11,993 $ 13,016 Variable lease payments $ 448 $ 365 $ 280 Sublease income (1) $ 5,233 $ 4,023 $ 4,053 (1) The Company entered into sublease agreements for certain leased office space, and the amounts were included in other expenses, net in the consolidated statement of operations. Supplemental information related to the Company’s operating leases was as follows ($ in thousands): As of December 31, 2025 As of December 31, 2024 Weighted-average remaining lease term (in years) 5.1 5.8 Weighted-average discount rate 9.0 % 9.1 % Year Ended December 31, 2025 2024 2023 Operating lease right-of-use assets recognized in exchange for new operating lease obligations (1) $ (113) $ (17,737) $ (1,839) (1) During the year ended December 31, 2025 and 2024, $0.1 million and $17.7 million of operating lease right-of-use assets and corresponding lease liability were derecognized as a result of early termination which was accounted for as a lease modification. Maturities of the Company’s operating lease liabilities as of December 31, 2025 were as follows (in thousands): 2026 $ 10,085 2027 8,629 2028 5,924 2029 6,022 2030 6,022 Thereafter 5,521 Total 42,203 Less: imputed interest (7,991) Total operating lease liabilities $ 34,212 NOTE 15 - COMMITMENTS AND CONTINGENCIES Legal Proceedings — From time to time the Company is subject to legal proceedings and claims in the ordinary course of business. The results of such matters often cannot be predicted with certainty. In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal proceeding and claims when those matters present loss contingencies which are both probable and reasonably estimable. All such liabilities arising from current legal and regulatory Table of Contents F-44
matters, to the extent such matters existed, have been recorded in accrued expenses and other liabilities on the consolidated balance sheets and these matters are immaterial. Contractual Obligations and Commitments — From time to time, the Company entered into a purchase commitment with our third-party cloud computing web services provider. As of December 31, 2025, the total remaining contractual obligations are approximately $10.7 million, of which $6.3 million is for the next 12 months. The Company may pay more than the minimum purchase commitment based on usage. Additionally, the Company has contractual obligations related to its lease for corporate office space. See Note 14 for details regarding when these obligations are due. In October 2024, the Company completed the acquisition of Theorem Technology, Inc. (“Theorem”), a Silicon Valley-based institutional asset manager focused exclusively on the consumer credit space, managing assets for global institutional investors since its founding in 2014. The Company acquired 100% of Theorem’s equity for approximately $17.5 million, consisting of $10.0 million cash and 504,440 of the Company’s Class A Ordinary Shares ($7.5 million worth as of the closing date), with an additional contingent consideration based on achievement of certain performance objectives defined in the purchase agreement. The Company established contingent consideration liability is reported at fair value, which is determined based on the present value of an expected payment under the arrangement, using an option pricing model based on a number of assumptions, including certain unobservable assumptions discounted at an estimated market interest rate. The fair value of the liability is updated each reporting period, with changes in fair value reported within “Other expenses, net.” The fair value of the contingent consideration liability was $0.2 million and $6.1 million as of December 31, 2025 and December 31, 2024, respectively. Guarantees and Indemnifications — In the ordinary course of business, the Company may provide indemnifications or loss guarantees of varying scope and terms to customers and other third parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. For our forward flow agreements, we may be subject to a contractual performance requirement. Where applicable, this requirement is measured periodically over the life of the underlying loans. If the loans’ performance is below the contractual requirement, the counterparty may have first loss up until a contractual agreed limit. If the loans’ performance is below the counterparty’s first loss limit, or if there is no first loss limit, then Pagaya would be required to make a payment to the counterparty such that the loans purchased would have achieved the contractual performance requirement. There is a contractual maximum loss for Pagaya’s loss protection with the counterparty taking full risk of loss beyond Pagaya’s loss protection. Our guarantee of contractual loss protection for the buyer meets the accounting definition of a derivative, and therefore we recognize, at inception and each reporting period, a liability for the fair value of the estimated loss protection payments, if any. As of December 31, 2025, there have been no known events or circumstances that have resulted in a material indemnification liability and the Company did not incur material costs to defend lawsuits or settle claims related to these indemnifications. As of December 31, 2025, the unfunded maximum potential amount of undiscounted future payments the Company could be required to make under these guarantees totaled $120.2 million. Additionally, in accordance with the guarantee contracts, the Company is required to fund segregated cash balances to provide protection in the event the Company is not able to meet its contractual commitments. As of December 31, 2025, $46.0 million has been segregated and recognized within restricted cash and cash equivalents, of which $12.9 million has been accrued within accrued expenses and other liabilities in the consolidated balance sheets in accordance with these contractual requirements. NOTE 16 - INCOME TAXES Corporate Income Tax - Ordinary taxable income in Israel is subject to a corporate tax rate of 23%. Ordinary taxable income in Israel is subject to a corporate tax rate of 23%. However, the Company has received an approval from the Israeli Tax authorities on November 18, 2021 for Preferred Technological Enterprise (“PTE”) status. The Company is eligible for PTE status which is implemented commencing 2020. Income from a PTE is subject to 12% tax rate. The Company is currently in the process of obtaining a renewal of its PTE status. Foreign Exchange Regulations in Israel Under the Foreign Exchange Regulations, the Company calculates its tax liability in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars is translated into NIS according to the exchange rate as of December 31st of each year. Table of Contents F-45
One Big Beautiful Bill Act On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the U.S. which contains a broad range of tax reform provisions affecting businesses. The Company took an accelerated deduction following the enactment of new tax law. The OBBBA legislation is not expected to have a material impact on our effective tax rate, deferred tax position, or results of operations in 2026. Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence. The components of income (loss) before income taxes are as follows (in thousands): December 31, 2025 2024 2023 Domestic (Israel) $ (74,582) $ (8,480) $ (53,292) Foreign 126,207 (412,642) (127,876) Total income (loss) before income taxes $ 51,625 $ (421,122) $ (181,168) The income tax (benefit) expense consists of (in thousands): December 31, 2025 2024 2023 Current: Domestic $ (57) $ (247) $ 593 Foreign (19,499) 24,741 16,601 Total current (19,556) 24,494 17,194 Deferred: Domestic (189) 82 (461) Foreign — — (1,162) Total deferred (189) 82 (1,623) Total income tax provision $ (19,745) $ 24,576 $ 15,571 Effective Tax Rate The following table presents the reconciliation between Company’s statutory tax and effective income taxes the for the year ended December 31, 2025 after the adoption of ASU 2023-09 (in thousands): Table of Contents F-46
December 31, 2025 Amount Percent Theoretical income taxes at Israel statutory rate $ 11,874 23 % Foreign tax effects: United States: State and local income taxes, net of federal income tax effect (3,158) (6) % Statutory tax rate difference (3,081) (6) % Interest expense adjustments (7,183) (14) % Base Erosion and Anti-Abuse Tax (BEAT) 6,255 12 % Change in valuation allowances (25,404) (49) % Non-deductible compensations 3,294 6 % Contingent consideration (1,241) (2) % Other (247) — % Cayman Islands 2,814 5 % Other foreign jurisdictions 16 — % Change in valuation allowances 6,420 12 % (Nontaxable) or nondeductible items: Share-based payment awards 5,690 11 % Statutory tax rate difference (Preferred technological enterprise) 4,874 9 % Changes in unrecognized tax benefits (20,592) (40) % Other adjustments (76) — % Effective income tax benefit $ (19,745) NM* The following tables presents the reconciliation between Company’s statutory tax and effective income taxes the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09 (in thousands): December 31, 2024 2023 Loss before income taxes $ (421,122) $ (181,168) Israel statutory income tax rate 23 % 23 % Theoretical income taxes at statutory rate (96,858) (41,669) Preferred technological enterprise benefit 949 5,891 Deferred tax assets for which valuation allowance was provided 82,602 16,067 Permanent differences 10,033 7,643 Uncertain tax positions 9,035 13,500 Prior year taxes (1,416) (2,312) Subsidiaries taxed at a different tax rate 17,594 16,443 Changes in valuation allowance — (1,162) Other adjustments 2,637 1,170 Effective income tax $ 24,576 $ 15,571 Effective tax rate NM* NM* *NM = Not meaningful. Deferred Tax Assets and Liabilities Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025 and 2024, a Table of Contents F-47
valuation allowance was provided reducing the deferred tax assets due to uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. As of December 31, 2025 and 2024, deferred tax assets and deferred tax liabilities presented in the consolidated balance sheets are comprised as follows (in thousands): December 31, 2025 2024 Carry forward tax losses $ 19,854 $ 13,912 Research and development cost 5,657 8,930 Compensations and benefits 7,218 9,748 Operating lease liability 4,847 5,525 Investments credit loss 64,327 96,324 Interest expense (Section 163j) — 8,082 Other comprehensive income 10,911 2,715 Capital loss 1,262 948 Equity method and other investments 3,228 1,062 Other 3,837 983 Deferred tax assets before valuation allowance 121,141 148,229 Valuation allowance 111,648 140,020 Deferred tax assets 9,493 8,209 Intangible assets (1,066) (1,838) Right-of-use assets (4,305) (5,401) Capitalized research and development costs (3,759) — Equity method and other investments — (904) Property, equipment and software (335) (246) Other (28) (9) Deferred tax liabilities (9,493) (8,398) Deferred tax liabilities, net $ — $ (189) As of December 31, 2025 the Company has an accumulated tax loss carry forward of approximately $110.7 million in Israel and $32.3 million federal and state losses in the U.S which can be offset with the limitation as described in Section 382 of the IRS Code due to U.S subsidiary prior change in ownership. These losses do not have an expiration date. Uncertain Tax Positions A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows (in thousands): December 31, 2025 2024 Uncertain tax positions, beginning of the year $ 31,170 $ 22,135 (Decrease) increase in tax positions for prior years (25,724) (13,001) Increases related to current year tax positions 5,543 21,622 Revaluation (411) 414 Uncertain tax positions, end of year $ 10,578 $ 31,170 As of December 31, 2025 and 2024, unrecognized tax benefits of $10.6 million and $31.2 million, respectively, if recognized, would affect our effective tax rate in a future period. The Company currently does not expect uncertain tax positions to change significantly over the next twelve months. Table of Contents F-48
The Company accrued interest and penalties related to uncertain tax positions recorded during the years ended December 31, 2025, 2024, and 2023. The amounts were immaterial. Cash Income Taxes Paid (Net of Refunds) The components of income taxes paid (net of refunds) for the year ended December 31, 2025 are as follows (in thousands): December 31, 2025 Domestic (Israel) $ 114 Foreign (U.S.) 2,381 Total $ 2,495 Tax Assessments The Company files income tax return in various jurisdictions with varying statue of limitations. As of December 31, 2025, the Company have received final tax assessments in Israel through 2020. In 2025, the Company is currently subject to tax audits in Israel and federal and state tax audits in U.S. The tax audits are ongoing and to date, no material issues have been raised and no adjustments have been proposed. Pillar Two Taxation On October 8, 2021, the Organisation for Economic Co-operation and Development (“OECD”)/G20 inclusive framework (the “Inclusive Framework”) on Base Erosion and Profit Shifting published a statement updating and finalizing the key components of a two-pillar plan on global tax reform. The Inclusive Framework plan has now been agreed to by more than 140 OECD members. While many countries have adopted some or all aspects of these rules, some countries have not adopted any or all of them, and many interpretive questions remain that are expected to be addressed in future guidance. In December 2025, Israel enacted Pillar Two legislation to implement a 15% global minimum tax on multinational enterprise groups with consolidated revenues exceeding €750 million in at least two of the four preceding fiscal years, effective from January 1, 2026. The Company is evaluating the effects of the legislation on our effective tax rate and cash tax position. NOTE 17 - TRANSACTIONS WITH RELATED PARTIES In the ordinary course of business, the Company may enter into transactions with directors, principal officers, their immediate families, and affiliated companies in which they are principal shareholders (commonly referred to as related parties). The Company has transactions with the securitization vehicles and other Financing Vehicles which are also related parties. As of December 31, 2025, the total fee receivables from related parties are $106.9 million, which consist of $85.9 million from securitization vehicles and $21.0 million from other Financing Vehicles. As of December 31, 2024, the total fee receivables from related parties are $99.4 million, which consists of $79.0 million from securitization vehicles and $20.4 million from other Financing Vehicles. As of December 31, 2025 and 2024, the Company had amounts due from related parties $42.6 million and $15.2 million, respectively, which are included within other assets on the consolidated balance sheets. These amounts are entirely attributable to transactions with Financing Vehicles. Additionally, as of December 31, 2025 and 2024, the Company had amounts due to related parties of $10.6 million and $3.0 million, respectively, which are included within accrued expenses and other liabilities on the consolidated balance sheets. For the year ended December 31, 2025, the total revenue from related parties is $652.7 million, which consists of $621.9 million from securitization vehicles and $30.9 million from other Financing Vehicles. For the year ended December 31, 2024, the total revenue from related parties is $679.1 million, which consists of $639.4 million from securitization vehicles and $39.7 million from other Financing Vehicles. For the year ended December 31, 2023, the total revenue from related parties is $622.2 million, which consists of $569.8 million from securitization vehicles and $52.4 million from other Financing Vehicles. For the year ended December 31, 2025 and 2024, the Company purchased approximately $13.2 million and $39.9 million of loan principal from the Financing Vehicles, and recognized a loss of approximately $6.2 million and $36.4 million with respect to Table of Contents F-49
these loans, respectively. For the year ended December 31, 2023, the Company did not purchase any loans from the Financing Vehicles. NOTE 18 - EARNINGS (LOSS) PER SHARE Earnings (loss) per share is presented in conformity with the two-class method required for multiple classes of ordinary share and participating securities. Basic earnings per share is computed using the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of share options, restricted stock units and other contingently issuable shares. The dilutive effect of outstanding share options, restricted stock units and other contingently issuable shares is reflected in diluted earnings per share by application of the treasury stock method. The Company has two classes of ordinary share: Class A and Class B. The computation of the diluted earnings per share of Class A Ordinary Shares assumes the conversion of Class B Ordinary Shares, while the diluted earnings per share of Class B Ordinary Shares does not assume the conversion of those shares. The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A Ordinary Shares and Class B Ordinary Shares are identical, except with respect to voting. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis and result in an identical earnings (loss) per share for each class under the two-class method. The Preferred Shares are a participating security, whereby if a dividend is declared to the holders of ordinary shares, the holders of Preferred Shares would participate to the same extent as if they had converted the Preferred Shares to ordinary shares. Net loss is attributed to ordinary shareholders and participating securities based on their participation rights. Net loss attributable to ordinary shareholders is not allocated to the Preferred Shares as the holders of the Preferred Shares do not have a contractual obligation to share in any losses. The following table sets forth the calculation of basic and diluted earnings (loss) per share attributable to ordinary shareholders for the year ended December 31, 2025, 2024 and 2023 (in thousands, except share and per share data): Year Ended December 31, 2025 Basic EPS: Numerator: Net income attributable to Pagaya Technologies Ltd. $ 81,389 Less: Undistributed earnings allocated to preferred shares 4,105 Net income attributable to Pagaya Technologies Ltd. ordinary shareholders, basic $ 77,284 Denominator: Weighted average shares used for earnings per ordinary share, basic 78,336,095 Earnings per share attributable to ordinary shareholders, basic $ 0.99 Diluted EPS: Numerator: Net income attributable to Pagaya Technologies Ltd. ordinary shareholders, diluted $ 77,284 Denominator: Shares used in computation of basic earnings per share 78,336,095 Ordinary share warrants 785,890 Share options 3,031,605 Unvested RSUs 943,637 Weighted average shares used for earnings per ordinary share, diluted 83,097,227 Earnings per share attributable to ordinary shareholders, diluted $ 0.93 Table of Contents F-50
Year Ended December 31, 2024 Year Ended December 31, 2023 Numerator: Net loss attributable to Pagaya Technologies Ltd. ordinary shareholders, basic and diluted $ (401,406) $ (128,438) Denominator: Weighted average shares used for net loss per ordinary share, basic and diluted 70,879,807 60,038,893 Net loss per share attributable to ordinary shareholders, basic and diluted $ (5.66) $ (2.14) EPS for Class B ordinary shares and EPS for preferred shares are not presented separately, as under the two-class method, the EPS for Class A, Class B and preferred shares are the same. The following potentially dilutive outstanding securities as of December 31, 2025, 2024 and 2023 were excluded from the computation of diluted earnings (loss) per share because their effect would have been anti-dilutive for the periods: December 31, 2025 2024 2023 Share options — 3,740,789 3,895,087 Options to restricted shares — 19,948,408 20,046,080 RSUs 425,251 3,009,918 3,034,203 Ordinary share warrants 1,229,166 2,016,321 2,016,326 Redeemable convertible preferred shares — 5,000,000 5,000,000 Exchangeable notes 11,434,704 11,434,704 — Net potential dilutive outstanding securities 13,089,121 45,150,140 33,991,696 NOTE 19 - SEGMENTS AND GEOGRAPHICAL INFORMATION Segment Information The Company manages, monitors, and reports its financial performance as a single operating segment. The Company's chief operating decision-maker (CODM), who is the Chief Executive Officer, assesses performance, makes operating decisions, and allocates resources based on consolidated financial information. In accordance with Accounting Standards Update 2023-09, which requires public entities to disclose significant segment expense categories and amounts for each reportable segment, the following disclosures are provided for the Company's single reportable segment: Year Ended December 31, 2025 2024 2023 (in thousands) Personnel related costs $ 150,319 $ 175,631 $ 189,965 Non-personnel related costs 138,045 192,125 137,542 Total (1) $ 288,364 $ 367,756 $ 327,507 (1) Total of personnel and non-personnel related costs represent the total of technology, data and product development, sales and marking, and general and administrative expenses in the consolidated statements of operations. Personnel related costs include salaries, wages, bonuses, employee benefits, payroll taxes, and other related expenses associated with our workforce. Non-personnel related costs encompass expenses such as rent, utilities, depreciation and amortization, marketing and advertising, professional services, and other operational costs not directly linked to personnel. The Company does not have additional reportable segments, and therefore, all financial information is presented on a consolidated basis. The Company's assets are not allocated to segments for internal reporting purposes but are managed on a consolidated basis. However, for the purposes of geographical disclosure, long-lived assets are allocated based on where they are located. Table of Contents F-51
Geographical Information A. Revenue from Fees The following table sets forth revenue from fees generated by geographic area (in thousands): December 31, 2025 2024 2023 United States $ 1,261,341 $ 1,004,550 $ 772,814 Israel — — — Cayman — — — Total revenue from fees $ 1,261,341 $ 1,004,550 $ 772,814 B. Long-Term Assets The Company’s long-term assets, excluding intangible assets, are primarily based in the United States with 95% and 92% of total as of December 31, 2025 and 2024, respectively. The following tables provide long-term assets, including long-lived assets of right-of-use and property and equipment, net, yet excluding intangible assets, by geographic area (in thousands): December 31, 2025 United States Israel Right-of-use assets $ 5,415 $ 25,163 Property and equipment, net 4,717 25,504 Other long-term assets, excluding intangible assets 1,028,371 7,303 Total long-term assets, excluding intangible assets $ 1,038,503 $ 57,970 % of total 95 % 5 % December 31, 2024 United States Israel Right-of-use assets $ 8,389 $ 28,487 Property and equipment, net 4,957 33,017 Other long-term assets, excluding intangible assets 819,415 9,445 Total long-term assets, excluding intangible assets $ 832,761 $ 70,949 % of total 92 % 8 % Table of Contents F-52
NOTE 20 - SUBSEQUENT EVENTS 2030 Notes Repurchase During the first quarter of 2026, the Company repurchased $7.4 million of the outstanding 2030 Notes at a price equal to 87.3% of the principal amount. The Company paid total consideration of $6.5 million, excluding accrued interest, resulting in a $0.8 million gain on extinguishment of debt. During the second quarter of 2026, the Company repurchased $3.8 million of the outstanding 2030 Notes at a price equal to 78.5% of the principal amount. The Company paid total consideration of $3.0 million, excluding accrued interest, resulting in a $0.7 million net gain on extinguishment of debt. These gains are net of the written-off carrying value, which included associated pro rata unamortized debt issuance cost. Following the repurchase, the remaining aggregate principal amount of the 2030 Notes outstanding was $481.9 million. Revolving Credit Facility Repayment During the first quarter of 2026, the Company drew down $114.7 million under its revolving credit facility, which was repaid in full during the second quarter of 2026. There were no penalties associated with the extinguishment of the revolving credit facility balance. Proceeds from Secured Borrowings During the second quarter of 2026, the Company received $65.0 million in proceeds from secured borrowings under its existing repurchase agreements. Table of Contents F-53
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Amendment No. 1) (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 001-41430 Pagaya Technologies Ltd. (Exact Name of Registrant as Specified in its Charter) Israel 98-1704718 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 335 Madison Ave, 16th Floor New York, New York 10017 (Address of Principal Executive Offices) (Zip Code) (646) 710-7714 (Registrant's Telephone Number, Including Area Code) Securities registered or to be registered pursuant to Section 12(b) of the Act Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Ordinary Shares, no par value PGY The NASDAQ Stock Market LLC Warrants to purchase Class A Ordinary Shares PGYWW The NASDAQ Stock Market LLC Securities registered or to be registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☒ Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☐ Emerging Growth Company ☐ Small Reporting Company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of April 20, 2026, the registrant had 71,556,702 Class A Ordinary Shares, no par value, outstanding and 11,288,577 Class B Ordinary Shares, no par value, outstanding, and 2,027,147 Series A Preferred Shares, no par value, outstanding. The aggregate market value of the voting Class A Ordinary Shares by non-affiliates of the registrant as of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, was $1,113,790,997, based on the closing price reported for such date on the NASDAQ. Shares of the registrant’s Class A Ordinary Shares held by each executive officer, director and holder of 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose. DOCUMENTS INCORPORATED BY REFERENCE None.
EXPLANATORY NOTE Pagaya Technologies Ltd. (“Pagaya” or the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2026 (the “Original Report” or the “2025 Annual Report on Form 10-K”). This Amendment is being filed for the purpose of including the information required by Items 10 through 14 of Part III of Form 10-K (the “Part III Information”) not included in the Original Report. The Part III Information was previously omitted from the Original Report in reliance on General Instruction G(3) to Form 10-K, which provides that the Part III Information may be either incorporated by reference from the registrant’s definitive proxy statement or included in an amendment to Form 10-K, in either case filed with the SEC not later than 120 days after the end of the fiscal year covered by the Form 10-K. We are filing this Amendment to include the Part III Information in the Original Report because our definitive proxy statement for our 2026 annual general meeting of shareholders containing this information will not be filed before the 120th day after the end of our last fiscal year. As such, this Amendment hereby amends and supplements Items 10 through 14 of Part III of the Original Report and amends and updates the Form 10-K cover page (primarily to update the number of shares of Common Stock outstanding to April 20, 2026). In addition, in accordance with applicable SEC rules, Item 15 of Part IV of the Original Report has been supplemented to include currently dated certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Except as described above, this Amendment does not amend, update or change any other items or disclosures in the Original Report and does not purport to reflect any information or events subsequent to the filing of the Original Report. As such, this Amendment speaks only as of the date the Original Report was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Report to give effect to any subsequent events.
TABLE OF CONTENTS TABLE OF CONTENTS ......................................................................................................................................... 1 Part III ....................................................................................................................................................................... 1 Item 10. Directors, Executive Officers Corporate Governance. ............................................................................... 1 Board of Directors ............................................................................................................................................... 1 Executive Officers ............................................................................................................................................... 3 Family Relationships ........................................................................................................................................... 3 Delinquent Section 16(a) Reports ....................................................................................................................... 3 Code of Business Conduct and Ethics .................................................................................................................. 4 Director Selection Process .................................................................................................................................... 4 Audit and Finance Committee .............................................................................................................................. 4 Insider Trading Policy ......................................................................................................................................... 4 Item 11. Executive Compensation. ........................................................................................................................... 6 Compensation Discussion and Analysis ............................................................................................................... 6 Compensation Committee Report ........................................................................................................................ 19 Summary Compensation Table ............................................................................................................................ 20 Grants of Plan-Based Awards .............................................................................................................................. 21 Outstanding Equity Awards at Fiscal Year End ................................................................................................... 22 Potential Payments Upon Termination or Change in Control .............................................................................. 24 Non-Employee Director Compensation ............................................................................................................... 26 Director Compensation Table .............................................................................................................................. 26 CEO Pay Ratio ..................................................................................................................................................... 26 Reconciliation of Non-GAAP Financial Measures .............................................................................................. 27 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. .. 28 Securities Authorized for Issuance Under Equity Compensation Plans .............................................................. 28 Security Ownership of Certain Beneficial Owners and Management .................................................................. 28 Item 13. Certain Relationships and Related Transactions, and Director Independence. .......................................... 30 Related Party Transactions .................................................................................................................................. 30 Director Independence ........................................................................................................................................ 32 Item 14. Principal Accountant Fees and Services. .................................................................................................... 33 Principal Accounting Firm Fees ........................................................................................................................... 33 Audit and Finance Committee Pre-Approval Policies and Procedures ............................................................... 33 Part IV ....................................................................................................................................................................... 34 Item 15. Exhibits and Financial Statement Schedules. ............................................................................................. 34 SIGNATURES .......................................................................................................................................................... 37
Part III Item 10. Directors, Executive Officers Corporate Governance. Board of Directors The board of directors of the Company (the “Board” or the “Board of Directors”) currently consists of nine directors. Our Articles of Association provide that our Board may consist of not less than three and up to ten directors. Under our Articles of Association, until 2024 our directors were divided into three classes, with each class elected to hold office for a term of three years. At the 2024 annual general meeting of shareholders, the phasing out of the Board classification was approved, such that beginning with our 2026 annual general meeting of shareholders, our Board will no longer be divided into classes and all directors up for election will be elected to hold office for a term of one year, except in the event of a director’s earlier death, resignation, removal or other termination. All of our current directors are serving a term that expires at the time of our 2026 annual general meeting of shareholders. Except as indicated herein, there are no arrangements or understandings between any director and any other person pursuant to which such director was selected as director. Biographical information concerning each of the director nominees is provided below. Gal Krubiner, 37, has served as the Chief Executive Officer and a director since co-founding the Company in 2016. Mr. Krubiner brings extensive experience in the investments and wealth management industry with a specialization in innovative and sophisticated credit structured products. Prior to co-founding Pagaya, Mr. Krubiner focused on structuring and distributing sophisticated credit and asset-backed securities products with UBS AG from 2012 to 2016, as well as holding other positions specializing in investment, entrepreneurism, and financial markets. Mr. Krubiner earned a B.A. in Applied Science, Economics & Statistics from Tel-Aviv University. The Board considered Mr. Krubiner’s experience in the investments, capital markets, and wealth management industries and his knowledge of our business in particular, gained through his services as our Chief Executive Officer and co-founder, in concluding that he is qualified to serve as a director. Avital Pardo, 40, has served as Deputy Chief Executive Officer and a director of the Company since September 2024, after previously serving as Chief Technology Officer and a director since co-founding the Company in 2016. Mr. Pardo was instrumental in designing the Company’s AI-based credit model and system. Prior to joining the Company, Mr. Pardo was one of the first employees at Fundbox and focused on algorithms from 2014 to 2015. Mr. Pardo earned a B.A. in Mathematics and Physics and a Master of Science, Mathematics from Hebrew University. The Board considered Mr. Pardo’s experience in algorithmic development, artificial intelligence, and credit modeling, and his knowledge of our business in particular, gained through his services as our Deputy Chief Executive Officer and co-founder, in concluding that he is qualified to serve as a director. Yahav Yulzari, 40, has served as Deputy CEO and a director of the Company since September 2024, after previously serving as Chief Revenue Officer and a director since co-founding the Company in 2016. In his current role, Mr. Yulzari is responsible for managing and expanding the Company’s strategic business relationships with key partners globally. He also leads initiatives to mentor and develop the Company’s next generation of leaders, instilling values of excellence and preparing them for senior roles. Additionally, Mr. Yulzari oversees the Company’s investments in startups founded by Pagaya alumni, with a focus on ventures aligned with the Company’s core business activities. Prior to co-founding Pagaya, Mr. Yulzari was a real estate entrepreneur, leading residential and commercial development projects in Tel Aviv and London. Before transitioning into business, he had a professional sports career as a goalkeeper in the Israeli Premier Football League and was a member of Israel’s national team. The Board considered Mr. Yulzari’s experience in strategic business development, global partner relations, and large-scale entrepreneurship, and his knowledge of our business in particular, gained through his services as our Deputy Chief Executive Officer and co-founder, in concluding that he is qualified to serve as a director. Avi Zeevi, 75, has served as a director of the Company since 2016. Mr. Zeevi also formerly served as Chairman of the board of directors of Payoneer Inc. from 2008 until June 2025. Mr. Zeevi is a FinTech entrepreneur and investor. He cofounded the Viola Group, a private equity investment group with over $6 billion of assets under management, in 2000, and is a co-founder and founding partner of Viola Ventures, a venture capital firm. Mr. Zeevi is also a co-founder and the Chairman of the investment committee of Viola FinTech. Mr. Zeevi has more than 45 years of experience as an entrepreneur, executive and investor. Mr. Zeevi has experience in the global financial industry through his involvement in several FinTech companies including MINT Systems, Decalog and Actimize, where he served as Chairman from 2001 until it was sold to NICE Systems. Mr. Zeevi also serves as a Chairman of Personetics Technologies Ltd. and as a director of G2RS Inc., Duetti Inc., Sympera Ltd., Bounce Technologies Ltd. and Hili Health Ltd. He also serves as a director in companies within the Viola 1
Group and entities affiliated with the Viola Group. Furthermore, Mr. Zeevi is also the Chairman of the investment committee of Israel Legacy Partners, a private equity fund focused on long-term investments in family companies. Mr. Zeevi was a board member at the Center for Educational Technology (CET) from 2004 until 2025, which is dedicated to the advancement of the education system in Israel, in the Jewish world and around the globe. He is also a member of the Board of Governors of the Technion, the Israel Institute of Technology and a board member at Bat Sheva Dance Company. Mr. Zeevi received his B.Sc in Industrial Engineering from the Technion, Israel Institute of Technology in 1973. The Board considered Mr. Zeevi’s experience in the venture capital, private equity, and the global financial technology industries, as well as his extensive track record of founding and scaling high-growth technology companies and his service as both an executive and director of publicly traded companies, in concluding that he is qualified to serve as a director. Alison Davis, 64, has served as a director since 2024. Ms. Davis is currently chairman and managing partner of Fifth Era and Blockchain Coinvestors. Ms. Davis is an experienced corporate executive, public company board director, an active investor in growth companies and a best-selling author on the topics of technology and innovation. In addition to serving on the Company’s Board, Ms. Davis is currently a director of Bitwise and Kraken. She is also the chairman of the advisory board for Blockchain Capital, chairman of Renaissance Entrepreneurship and a director of the National Association of Corporate Directors (NACD) Northern California and Cambridge in America. Ms. Davis has served on the boards of over 25 public and private companies as chairman, audit committee chair, compensation committee chair and technology and innovation committee Chair. Public board roles have included City National Bank, Diamond Foods, Dispatch Management Services, Fiserv, First Data Corporation, Janus Henderson Group, LECG, Ooma, NatWest (formerly RBS), Silicon Valley Bank, Unisys, and Xoom. Ms. Davis was previously the managing partner of Belvedere Capital, a regulated bank holding company and private equity firm focused on investing in US banks and financial services firms where she worked closely with the Federal Reserve, the OCC, the FDIC and various state banking regulators. Prior to this, Ms. Davis was the chief financial officer of Barclays Global Investors (now BlackRock), the world’s largest institutional investment firm where she was part of the leadership team that launched the iShares product range. Earlier in her career, Ms. Davis spent 14 years as a strategy consultant and advisor to Fortune 500 CEOs, boards and executive teams with McKinsey & Company, and as a practice leader with A.T. Kearney where she built and co-led the global Financial Services Practice. She is a bestselling author and has been frequently named a “Most Influential Women in Business” by the San Francisco Business Times. She received her B.A. with Honors and Master’s in Economics from Cambridge University in England, and an MBA from the Stanford Graduate School of Business. The Board considered Ms. Davis’ experience in global financial services, venture capital, and digital asset innovation, as well as her extensive tenure as a chair of audit and technology committees for numerous public companies, in concluding that she is qualified to serve as a director. Harvey Golub, 86, has served as a director of the Company since 2018. Mr. Golub currently serves as the chairman of Dynasty Financial Partners and Marblegate Acquisition Corp, and as a member of the advisory board of Marblegate Asset Management LLC. He is also on the boards of the American Enterprise Institute and the Manhattan Institute for Policy Research, as well as a member of the board of trustees of Jupiter Medical Center and a member of the investment committee of the Maltz Jupiter Theater. Mr. Golub has over 35 years of experience guiding companies’ organizational visions and strategies. He was chairman and CEO of American Express and IDS Financial Services and a director of McKinsey & Company. He has also served as chairman on the boards of American International Group, Campbell Soup Company, and the Reader’s Digest Association, and a member of the boards of Dow Jones & Company, Hess Corporation, RHJ International and several private companies. Mr. Golub received his B.S. from New York University. The Board considered Mr. Golub’s experience in global corporate governance, large-scale organizational strategy, and executive leadership of multinational financial services institutions, in concluding that he is qualified to serve as a director. Asheet Mehta, 60, has served as a director of the Company since 2024. Mr. Mehta is a seasoned financial services leader, board director, and former McKinsey senior partner with more than 30 years of experience partnering with global financial institutions, scaling businesses, and guiding CEOs through strategy, transformation, and risk management. He brings deep industry expertise, broad functional range, and extensive experience operating at the intersection of financial services, technology, and evolving regulatory environments. He is the founder and CEO of Resfi.ai, a customer-centric financial services company that uses AI and behavioral finance to automatically deliver and implement financial advice for consumers on cash management and borrowing. Mr. Mehta also serves on the boards of Unqork and Piramal Finance, where he also serves on the Risk and Sustainability Committee. He is a senior partner emeritus of McKinsey & Company. He is also a senior advisor to Avantos.ai, Bright Money and NetXD. During his three-decade career at McKinsey, Mr. Mehta co-led the Global Financial Services and Payments practices, served on McKinsey’s board, and was chief transformation officer for North America. His client work spanned global universal banks, credit card companies, cash management banks, cross- border payments firms, exchanges, custody banks, insurers, asset and wealth managers, and fintechs, from the largest multinational institutions to regional leaders. He partnered with CEOs and boards on strategy, technology modernization, performance transformation, growth, marketing, innovation, organizational change, and risk and regulatory management. Mr. Mehta also serves on the board of the Asia Society, where he chairs the audit and risk committee, and on the board of visitors of Columbia Engineering, where he chairs the finance committee. Mr. Mehta holds an MBA with high honors from the 2
University of Chicago Booth School of Business, with a specialization in Finance and a concentration in Production Management. He earned a B.S. in Electrical Engineering from Columbia University. The Board considered Mr. Mehta’s experience in global financial services strategy, growth, risk management, and large-scale transformation, as well as his deep expertise in financial technology and regulatory environments, in concluding that he is qualified to serve as a director. Dan Petrozzo, 61, has served as a director of the Company since 2018. Mr. Petrozzo served as a partner and venture partner at Oak HC/FT from 2017 to 2024, where he focused on growth equity and early-stage venture opportunities in FinTech. He currently serves on the boards of Sure Inc. and Nokod Security Ltd. Previously, Mr. Petrozzo co-founded Verilume, a cloud computing company, which was sold to Intralinks in 2016. Mr. Petrozzo is a former partner at Goldman Sachs where he served as Global Head of Technology for Investment Management. He was also chief information officer at Fidelity Investments and co-chief information officer at Morgan Stanley. He was also on the founding team at StorageApps, which was sold to Hewlett Packard. Mr. Petrozzo received his B.A. from Moravian College and his J.D. from Seton Hall University Law School. The Board considered Mr. Petrozzo’s experience in enterprise technology leadership at global financial institutions, cloud computing entrepreneurship, and financial technology venture capital, in concluding that he is qualified to serve as a director. Tami Rosen, 55, has served as a director of the Company since 2024. She joined Pagaya in 2021 as Chief People Officer and serves as Chief Development Officer. As the Company’s first C-Suite hire, Ms. Rosen was instrumental in helping to scale Pagaya’s business, support M&A activities, attract and retain top talent, and assist in Pagaya’s successful public offering. Prior to joining Pagaya, Ms. Rosen served in various C-Suite and senior executive roles at Apple, Goldman Sachs, Atlassian, and Luminar Technologies, including as chief people officer at both Atlassian and Luminar Technologies. She pioneered Wall Street’s first LGBTQ+ Ally Program at Goldman Sachs and conceptualized and launched Atlassian’s TEAM Anywhere program, revolutionizing the future of work. At Pagaya, she spearheaded the Culture of Learning initiative, which emphasizes continuous growth. Ms. Rosen received her undergraduate degree in Law and Society from Binghamton University. The Board considered Ms. Rosen’s experience in human capital strategy, organizational scaling, and corporate development, as well as her critical role in navigating the Company’s transition to a public entity, in concluding that she is qualified to serve as a director. Executive Officers As of January 1, 2026, our executive officers are Gal Krubiner, our Chief Executive Officer, Avital Pardo, our Deputy Chief Executive Officer, Yahav Yulzari, our Deputy Chief Executive officer, Sanjiv Das, our President, and Evangelos Perros, our Chief Financial Officer. The biographies of Mr. Krubiner, Mr. Pardo, and Mr. Yulzari, each of whom is also a director, are provided under “Board of Directors” above. The biographies for our other executive officers are included below. Ms. Rosen, our Chief Development Officer, ceased being an executive officer on January 1, 2026. Sanjiv Das, 64, joined Pagaya as President in 2023. Mr. Das has over 30 years of experience in financial services and, in his role as President, oversees the strategy and growth of the Company’s commercial business. Prior to joining Pagaya, Mr. Das served as CEO of Caliber Home Loans, a NewRez-owned residential mortgage lending company. There, he delivered record year-over-year growth in the non-banking sector. Mr. Das has also held positions as CEO, president and chairman of the board for Citi’s Mortgage Division, and as Head of all International Businesses at First Data, a KKR-owned company. He has also held senior roles at Morgan Stanley, American Express and Bank of America. Mr. Das received his bachelor’s degree in Mathematics from Delhi University and his M.B.A from the Indian Institute of Management Ahmedabad. Evangelos Perros, 50, has been with Pagaya since 2021 and has served as Chief Financial Officer of the Company since February 2024. Prior to being named CFO, Mr. Perros served as the Interim CFO and, previously, the Company’s Deputy CFO and Head of Strategic Finance. With over 25 years of experience in the financial industry, Mr. Perros holds responsibility for all financial functions at Pagaya, including Investor Relations, Corporate Development and Strategy. Prior to joining Pagaya, he was a Managing Director at JP Morgan Chase, where he served in leadership positions in finance and investment banking, and most recently was a Managing Director and Head of Business Planning & Analysis at Apollo Global Management. Mr. Perros received his B.Sc. in Business Administration and Management from the University of Piraeus and his M.B.A. from Yale School of Management. Family Relationships There are no family relationships between any of the Company’s executive officers and directors. Delinquent Section 16(a) Reports 3
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of the Company’s Ordinary Shares, to file with the SEC reports of beneficial ownership and reports of changes in beneficial ownership in the Ordinary Shares. Because the Company was a foreign private issuer during part of the year ended December 31, 2025, the Company’s directors, executive officers and greater than 10% shareholders were exempt from the requirements of Section 16(a) during that period. As of June 30, 2025, the Company determined that it no longer satisfied the criteria to be a foreign private issuer. Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, filed electronically with the SEC during the year ended December 31, 2025, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with during fiscal year 2025. Code of Business Conduct and Ethics We have adopted a Code of Conduct and Ethics governing the activities of directors, officers and employees of the Company, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, which can be accessed without charge by visiting our website at: https:// investor.pagaya.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendments to, or waivers from, a provision of our Code of Conduct and Ethics by posting such information within four business days at: https://investor.pagaya.com. Director Selection Process The Board is responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual general meetings of shareholders. The Nominating and Corporate Governance Committee of the Board of Directors (the “Nominating and Corporate Governance Committee”) is responsible for identifying, screening and recommending candidates to the Board for Board membership. When formulating its Board membership recommendations, the Nominating and Corporate Governance Committee also considers recommendations from shareholders and others as it deems appropriate. The Nominating and Corporate Governance Committee periodically reviews and recommends for approval by the Board criteria for membership on the Board and the skills and characteristics required of Board members. Among the qualifications considered in the selection of director candidates, the Nominating and Corporate Governance Committee considers experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, potential conflicts of interest and such other relevant factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board. Shareholders may recommend potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the Company’s Chief Legal Officer at 335 Madison Avenue, 16th Floor, New York, NY, 10017 in accordance with the Israel Companies Law and the Company’s Articles of Association. The Nominating and Corporate Governance Committee evaluates these candidates by applying substantially the same criteria set forth above. Audit and Finance Committee The Audit and Finance Committee of the Board of Directors (the “Audit and Finance Committee”) is responsible, among its other duties and responsibilities, for overseeing Pagaya’s accounting and financial reporting processes, audits of financial statements, qualifications and independence of the independent registered public accounting firm, the effectiveness of internal control over financial reporting and the performance of the internal audit function and independent registered public accounting firm. The Audit and Finance Committee reviews and assesses the qualitative aspects of Pagaya’s financial reporting, processes to manage business and financial risks and compliance with significant applicable legal, ethical and regulatory requirements. The Audit and Finance Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm. The members of the Audit and Finance Committee are Avi Zeevi, Alison Davis, Harvey Golub, and Dan Petrozzo, with Avi Zeevi serving as Chair of the Audit and Finance Committee. All members of the Audit and Finance Committee are financially sophisticated as required by the Nasdaq listing standards. The Board has determined that each of Avi Zeevi and Alison Davis qualifies as an “audit committee financial expert” within the meaning of applicable SEC regulations. In making this determination, the Board considered Mr. Zeevi’s and Ms. Davis’s formal education and previous and current experience in financial and accounting roles, described in “Board of Directors” above. Insider Trading Policy 4
We have adopted an Insider Trading Policy governing the purchase, sale and/or other dispositions of our securities by directors, officers and employees of the Company that is designed to promote compliance with insider trading laws, rules and regulations. See Exhibit 19.1 to the 2025 Annual Report on Form 10-K. 5
Item 11. Executive Compensation. Compensation Discussion and Analysis This Compensation Discussion and Analysis provides an overview of our executive compensation program, philosophy and objectives, discusses our executive compensation policies and practices, and analyzes how and why the Compensation Committee of our Board (the “Compensation Committee”) arrived at specific compensation decisions for 2025 for our named executive officers. Our named executive officers for 2025 are: Gal Krubiner Chief Executive Officer Evangelos Perros Chief Financial Officer Sanjiv Das President Tami Rosen Chief Development Officer Avital Pardo Deputy Chief Executive Officer Name Title The following discussion and analysis of compensation arrangements of our named executive officers should be read together with the compensation tables and related disclosures set forth below. This discussion contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. The actual amount and form of compensation and the compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion. Executive Summary Pagaya was founded with the goal of improving upon legacy underwriting practices in the United States through the use of artificial intelligence (“AI”) powered technology and data science. We have built and continue to enhance a network connecting financial institutions and their customers with investors, which is designed to facilitate greater access to financial products and services for consumers. Our business began in personal loans and has expanded to auto loans, point-of-sale and single-family rental (“SFR”). Summary of 2025 Business Highlights Our executive compensation program is designed to align the compensation of our executive officers with our financial and operational performance on both an annual and multi-year basis in an effort to deliver meaningful long-term shareholder value creation. In 2025, we demonstrated year-over-year growth across multiple measures, including: ● Record GAAP net income attributable to Pagaya shareholders of $81 million increased by $483 million year-over- year, driven primarily by revenue growth, lower expenses, and normalized impairments. ● Total revenue and other income of $1.3 billion increased by 26% year-over-year. ● Adjusted EBITDA of $371 million increased by $161 million compared to the prior year period, benefiting from growth in fee revenue less production costs and operating leverage as the business scales. The Compensation Committee believes that these metrics are useful indicators of our ability to grow our business consistent with our annual operating plan and considers these and other metrics when setting executive compensation. Consistent with our philosophy, the Compensation Committee approved an executive compensation program for 2025 that included elements of fixed and variable pay to align executives to the Company’s financial and operational performance. Summary of 2025 Executive Compensation Actions ● In 2025, we continued to structure a significant portion of our named executive officers’ target total direct compensation opportunity to be “at-risk” including a target annual performance bonus based on the Company’s financial and operational performance and an assessment of individual performance and/or long-term equity incentives in the form of time-based restricted stock units (“RSUs”) (Mr. Krubiner and Mr. Pardo did not receive long-term equity incentives in 2025). ● The Compensation Committee and Board determined annual performance bonus outcomes based on meeting financial targets for Total Revenue and Other Income, GAAP Net Income, and Adjusted EBITDA. These targets 6
were selected to focus our executives on achieving both top-line and bottom-line performance to continue our commitment to our growth and profitability framework. Each named executive officer’s annual target bonus represented between 65% and 100% of his or her base salary, which could fund between 0% and 300% of target based on the achievement of the relevant financial targets. The Compensation Committee and the Board then assigned an individual performance modifier of between 0% and 300% and made final adjustments before approving payouts, subject to a maximum potential payout of 300% of each named executive officer’s then-current annual base salary. Our annual performance bonus is described in more detail under “2025 Executive Compensation Program— Annual Performance Bonus” below. For more information on the rationale for how we structure executive compensation, please refer to the section below entitled “2025 Executive Compensation Program—Long-Term Incentive Compensation”. Executive Compensation Policies and Practices Our executive compensation program reflects our strong commitment to good governance practices with respect to executive compensation: WHAT WE DO WHAT WE DON’T DO ✔ 100% Independent Directors on the Compensation Committee. ✘ No Guaranteed “Single Trigger” Change in Control Payments. ✔ Retain an Independent Compensation Advisor. ✘ No Tax Reimbursements or Tax Gross Ups on Severance or Change in Control Payments. ✔ Review and Reevaluate Executive Compensation Annually. ✘ No Special Executive Health Benefits, or Retirement Plans That Are Not Available to Our Employees Generally. ✔ Structure a Significant Portion of Executive Compensation to be At-Risk. ✘ No Short Sales or Hedging of Stock Ownership Positions or Other Derivative Transactions. ✔ Tie Performance Bonus Opportunities to Corporate Objectives. ✔ Emphasize Long-Term Equity Incentives. ✔ Implement and Enforce a NASDAQ-Compliant “Clawback” Policy. ✔ Establish Maximum Payout Amounts for the Annual Performance Bonus and Require Threshold Levels of Achievement for Payout Objectives, Philosophy and Elements of Executive Compensation Our executive compensation program aims to achieve the following principal objectives: ● attract, retain and reward highly-qualified executives; ● provide incentives that motivate and reward for achievement of our key performance goals that increase shareholder value over the long term; ● align our executives’ interests with those of our shareholders; and ● link pay to Company’s performance. Our executive compensation program generally consists of, and is intended to strike a balance among, three principal elements. The chart below includes these three elements, their principal features and rationale. 7
COMPENSATION ELEMENT VEHICLE DESCRIPTION PURPOSE Base Salary Cash Fixed component of pay. Provides regularly-paid compensation for executives to perform their job functions and financial stability and security. Annual Performance Bonus Cash Opportunity to earn an annual performance bonus based on achievement of Company financial and operational targets and an assessment of individual performance. Motivates and rewards the achievement of key drivers of our operating plans and business strategies and individual achievements. Long Term Incentives Equity RSU awards are typically granted annually and vest over multiple years, generally subject to continued employment on the vesting date. Multi-year vesting period assists with retention and aligns executives’ interests with shareholder interests and changes in shareholder value over the long-term. We also provide our executive officers with severance and change in control-related payments and benefits, as well as benefits available to all our employees, including retirement benefits under our 401(k) plan and participation in various employee health and welfare benefit plans. We focus on providing a competitive compensation package to each of our executive officers that provides short-term and significant long-term incentives for executive officers to drive the achievement of our operating plans and business strategies. We believe that this approach provides an appropriate blend of short-term and long-term incentives that aligns our executives and shareholders. We do not have formal policies for allocating compensation among base salary, annual performance bonuses and equity awards, short-term and long-term compensation or among cash and non-cash compensation. Instead, the Compensation Committee uses its judgment to establish a total compensation program for each named executive officer that is a mix of current, short-term and long-term incentive compensation, and cash and non-cash compensation, that it believes appropriate to achieve the goals of our executive compensation program and our corporate objectives. However, we historically have structured a significant portion of our named executive officers’ total direct compensation so that it is comprised of performance-based bonus opportunities and/or long-term equity awards, in order to align our executive officers’ incentives with the interests of our shareholders and our corporate objectives. How We Determine Executive Compensation Role of our Compensation Committee and the Board The Compensation Committee is appointed by the Board to assist with the Board’s oversight responsibilities with respect to the Company’s compensation policies, plans and programs, administration of the Company’s equity plans and its responsibilities related to the compensation of the Company’s executive officers, senior management and non-employee directors, as appropriate. The Compensation Committee consists solely of independent directors. The Compensation Committee meets periodically throughout the year to manage and evaluate our executive compensation program, and determines the principal components of compensation (base salary, annual performance bonuses and equity awards) for our executive officers, including our named executive officers, on an annual basis; however, decisions may occur at other times for new hires, promotions or other special circumstances as the Compensation Committee determines appropriate. The Compensation Committee does not delegate authority to approve executive officer compensation. The Compensation Committee does not maintain a formal policy regarding the timing of equity awards to our executive officers, but typically grants equity awards at a regularly scheduled meeting in the first quarter of the year and at the time of a new hire or promotion. The Compensation Committee makes recommendations on the compensation and other terms of employment of the Chief Executive Officer and our other named executive officers and evaluates the Chief Executive Officer’s performance in light of relevant corporate performance goals and objectives, which are then presented to the independent members of the Board for further review, discussion, and final approval. 8
Role of Management The Compensation Committee works with and receives information and analyses from management, and considers such information and analyses in determining the structure and amount of compensation to be paid to our executive officers, including our named executive officers. Our Chief Executive Officer evaluates executive officer performance and provides the Compensation Committee with these assessments, as well as with his recommendations and proposals regarding executive officer compensation and decisions affecting base salaries, annual performance bonuses, equity awards and other compensation-related matters, outside of the presence of any other named executive officers. However, the Compensation Committee retains the final authority to make all compensation decisions for our executive officers. From time to time, various other members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, provide financial or other background information or advice or otherwise participate in Compensation Committee or Board meetings. Members of management, including our Chief Executive Officer, may attend portions of our Compensation Committee’s meetings, as determined by the Compensation Committee. Management works with our Chief Executive Officer to design and develop recommended compensation programs for our executive officers, including our named executive officers, to recommend changes to existing compensation programs, to recommend financial and other performance targets to be achieved under those programs, to prepare analyses of financial data, to prepare peer data comparisons and other briefing materials, and ultimately to implement the decisions of the Compensation Committee with respect to executive compensation. Neither our Chief Executive Officer nor any other executive officers or other employees are present during deliberations of, or decisions regarding, their own compensation or compensation of other executive officers, with the exception of our Chief Executive Officer who may be present during deliberations regarding the compensation of our other executive officers. Role of Compensation Consultant The Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. The Compensation Committee retained Semler Brossy as its compensation consultant to aid it in making executive pay decisions for 2025. As part of its engagement, Semler Brossy annually reviews and recommends updates as necessary to the group of peer companies the Compensation Committee uses as a reference in assessing the competitive market, making executive compensation decisions, evaluating current executive pay practices and considering different compensation programs to aid the Compensation Committee in making executive pay decisions for 2025. Semler Brossy also conducted market research and analysis to assist the Compensation Committee in developing executive compensation levels, including appropriate salaries, annual performance bonuses and equity awards for our executive officers, including our named executive officers. Semler Brossy also conducted a review of our non-employee director compensation policies and practices. The Compensation Committee annually reviews whether the work of Semler Brossy as a consultant to the Compensation Committee has raised any conflict of interest, taking into account the following factors: (i) the provision of other services to the Company by Semler Brossy; (ii) the amount of fees received from the Company as a percentage of Semler Brossy’s total revenue; (iii) Semler Brossy’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the individual compensation advisors employed by Semler Brossy with any member of our Compensation Committee; (v) any shares of the Company owned by Semler Brossy or the individual compensation advisors employed by Semler Brossy; and (vi) any business or personal relationship of Semler Brossy or the individual compensation advisors employed by Semler Brossy with any executive officer. After considering these factors, the Committee determined that there is no conflict of interest with regard to Semler Brossy. Use of Competitive Market Compensation Data The Compensation Committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable public companies with which we compete for executive talent. Pursuant to the direction of the Compensation Committee, Semler Brossy reviewed the peer group companies utilized for 2024 compensation decisions in connection with assessing the compensation practices of the publicly traded companies with whom we compete for such talent and determined that no changes were warranted for 2025. Based on input from the Compensation Committee, this list consists of companies from the financial technology and software industries with product and business model similarities to the Company. The resulting peer group used by the Compensation Committee in making executive compensation decisions for 2025 consisted of the following companies listed below, which included companies with revenues ranging from $98 million to $2.3 billion and market capitalizations ranging from $705 million to $19.8 billion. 9
SoFi Technologies, Inc. (SOFI) Upstart Holdings, Inc. (UPST) Affirm Holdings, Inc. (AFRM) nCino, Inc. (NCNO) Robinhood Markets, Inc. (HOOD) Lemonade, Inc. (LMND) LendingClub Corporation (LC) Marqeta, Inc. (MQ) SentinelOne, Inc. (S) Flywire Corporation (FLYW) Paymentus Holdings, Inc. (PAY) Blend Labs. Inc. (BLND) Open Lending Corporation (LPRO) The Compensation Committee, with the assistance of Semler Brossy, used data drawn from public filings of the companies in our compensation peer group (together, the “market data”), to evaluate the competitive market when determining the 2025 total direct compensation packages for our named executive officers, including base salary, annual performance bonuses and long-term incentive compensation opportunities. Semler Brossy prepared, and the Compensation Committee reviewed, a range of market data reference points with respect to base salary, annual performance bonuses, equity awards (valued based on an approximation of grant date fair value), total target cash compensation (base salary and annual performance bonuses) and target total direct compensation (total target cash compensation and equity compensation) with respect to each of our executive officers. The Compensation Committee did not target pay to fall at any particular percentile of the market data, but rather reviewed this market data as a helpful reference point in making 2025 compensation decisions. Competitive market data is only one of the factors that the Compensation Committee considers in making compensation decisions. The Compensation Committee also considers other factors as described below under “Factors Used in Determining Executive Compensation.” Factors Used in Determining Executive Compensation The Compensation Committee sets the compensation of our executive officers, including our named executive officers, at levels it determines to be competitive and appropriate for each executive officer, using the professional experience and judgment of Compensation Committee members. Pay decisions are not made by use of a formulaic approach or benchmark; the Compensation Committee believes executive pay decisions require consideration of a multitude of relevant factors which may vary from year to year. In making executive compensation decisions, the Compensation Committee generally takes into consideration a variety of factors, including the following: ● Company performance and existing business needs; ● Each executive officer’s individual performance, experience, skills, level of responsibility and the breadth, scope and complexity of the position, as well as the criticality of the skill set of the executive officer to the Company’s future performance; ● The need to attract new talent to our executive team and retain existing talent in a highly competitive industry where we compete for top talent; ● A range of market data reference points, as described above under “Use of Competitive Market Compensation Data”; ● The total compensation cost and shareholder dilution from executive compensation actions; ● A review of an executive officer’s total target and historical compensation and equity award holdings; ● Internal pay equity relative to similarly situated executives; ● Recommendations from an outside compensation consultant on compensation policy determinations for our executive officers; ● Our Chief Executive Officer’s recommendations, based on his direct knowledge of the performance by each executive officer; ● Our Compensation Committee’s independent judgment; and ● The results of the annual advisory vote of our shareholders on our executive compensation program (our “Say on Pay” vote). At our 2025 Annual General Meeting of Shareholders, we conducted a Say on Pay vote. Our shareholders supported the Say on Pay proposal with over 96% of the votes cast. The Compensation Committee considered the result and believes that it demonstrates that our shareholders are highly supportive of our executive compensation program. 2025 Executive Compensation Program 10
Base Salary In February 2025, the Compensation Committee reviewed the base salaries of our executive officers, including our named executive officers against the market data provided by Semler Brossy and each named executive officer’s annual performance, as well as recommendations from our Chief Executive Officer (except with respect to his own base salary) and the other factors described above under “Factors Used in Determining Executive Compensation.” Following this review, the Compensation Committee determined that no increase to each of our named executive officer’s base salary was necessary. Under the terms of their employment arrangements, Mr. Krubiner and Mr. Pardo were each entitled to an annual base salary of $1,331,000 in 2025; however, each of them waived the portion of his 2025 annual base salary over $1,000,000, while preserving his right to a compounded increase in future years. Actual base salary amounts for fiscal 2025 are reflected in the table below: Name 2025 Base Salary ($) Gal Krubiner(1) 1,000,000 Evangelos Perros 650,000 Sanjiv Das(2) 650,000 Tami Rosen 650,000 Avital Pardo(1)(3) 1,000,000 (1) Mr. Krubiner and Mr. Pardo were each entitled to an annual 10% salary increase in 2023, 2024, and 2025. Each of them waived the portion of his base salary over $1,000,000 for these years while preserving his right to a compounded increased in future years. Mr. Krubiner and Mr. Pardo would have each had an annual base salary of $1,331,000 in 2025 had he not waived the portion of his base salary over $1,000,000. (2) In addition to his regular salary, Mr. Das receives an additional annual payment of $750,000 paid in equal installments in accordance with the Company’s normal payroll practices, as set forth in Mr. Das’s employment agreement, and as described in this “Compensation Discussion and Analysis.” (3) Mr. Pardo receives his salary in Israeli shekels. Annual Performance Bonus The annual bonus plan (the “Bonus Plan”) applies to certain key employees, including the named executive officers, that are selected by the Compensation Committee. The Bonus Plan provides for the opportunity to earn an annual performance bonus based upon the attainment of predetermined financial and operational targets for the respective year and an assessment of individual performance. The Committee sets specific target percentages for annual performance bonuses as a percentage of our named executive officers’ base salary. At the end of the year, the Committee considers achievement of the applicable financial and/or operational targets and assesses individual performance, and makes recommendations to the Board for annual bonus payouts. Based on the achievement of the relevant financial and/or operational targets, the Compensation Committee and the Board assign an overall Company performance modifier between 0% and 300%. The Compensation Committee and the Board then assign an individual performance modifier between 0% and 300% and make final adjustments before approving payouts. In addition to the bonus based on achievement of the applicable financial and/or operational targets and individual performance, and any guaranteed bonus amounts in our executives’ employment agreements, the Board or the Compensation Committee has the authority to award each of the named executive officers a discretionary portion of their bonus. Additionally, under the Company’s Compensation Policy for Executive Officers and Directors, annual performance bonuses are capped at a maximum payout of 300% of the executive’s then-current annual base salary (in the case of Mr. Krubiner and Mr. Pardo, the cap is calculated including the waived amount of his annual base salary). Payments are made as soon as practicable following the end of each year. Subject to the rights contained in any agreement between us and the Executive, an executive officer must be employed by us on the bonus payment date to be eligible to receive a bonus payment. Target Annual Performance Bonus Opportunities The 2025 target annual performance bonus opportunities under the Bonus Plan for our named executive officers were set as follows: 11
Gal Krubiner 1,000,000 100 % Evangelos Perros 423,000 65 % Sanjiv Das 423,000 65 % Tami Rosen 423,000 65 % Avital Pardo(1) 1,000,000 100 % Name Target Bonus ($) Target Bonus (% of Base Salary) (1) Mr. Pardo’s annual cash incentive bonus was calculated in US dollars and he actually received it in Israeli shekels. In determining 2025 target annual performance bonus opportunities, the Compensation Committee considered the need to position our named executive officers appropriately relative to internal and external benchmarks, including the market data provided by Semler Brossy, and our executives’ individual performance, as well as recommendations from the Chief Executive Officer (except with respect to his own bonus) and the other factors described above under “Factors Used in Determining Executive Compensation.” Company Performance Goals and Bonus Structure In February 2025, the Compensation Committee adopted the following financial and operational targets for the Bonus Plan. The Committee selected these targets to focus our executives on achieving both top-line and bottom-line performance to continue our commitment to our growth and profitability framework, and they were intended to be rigorous in nature and incentivize our executives to achieve our operating plans and business strategies: Target Weighting Total Revenue and Other Income 30 % GAAP Net Income 25 % Adjusted EBITDA 45 % The following table shows the threshold, target, and maximum achievement levels for the individual Company performance goals for the 2025 Bonus Plan as well as the actual results and individual multipliers achieved based on Company performance, which resulted in an overall weighted Company modifier of 187.5% for the 2025 Bonus Plan: 2025 Annual Bonus - Company Performance Weighting Metric (1) Threshold (2) Target (2) Maximum (2) Actual Results Actual Multiplier 30% Total Revenue and Other Income $920M $1.15B $1.725B $1.3B 150% 25% GAAP Net Income $(20)M $3M $65M $81M 300% 45% Adjusted EBITDA $212M $265M $397M $371M 150% (1) Adjusted EBITDA is not a financial measure prepared in accordance with GAAP. See “—Reconciliation of Non-GAAP Financial Measures” for additional information regarding Adjusted EBITDA, including a reconciliation to its most directly comparable GAAP measure. (2) The threshold achievement represents the minimum goal that must be achieved for the metric to fund. Threshold achievement results in the metric funding at 75%, target achievement results in the metric funding at 100%, and maximum achievement results in the metric funding at 300%. Before annual performance bonuses are paid, the Compensation Committee and the Board consider individual performance and assign an individual performance modifier between 0% and 300%. The Compensation Committee and the Board then determine if any final adjustments are warranted. Factors that the Committee and the Board consider include particular achievements and difficulties during the year, whether the executive demonstrated our Company values, and other relevant factors as determined in their discretion. After considering these factors, the Committee and the Board assigned the following individual modifiers and approved the following payouts for the 2025 Bonus Plan: 12
Name(1) Target Annual Bonus ($) Company Modifier (%) Individual Modifier (%) Funded Bonus ($) Actual Bonus After Adjustments ($) Gal Krubiner 1,000,000 187.5 200 3,750,000 3,500,000 Evangelos Perros 423,000 187.5 150 1,189,688 1,000,000 Sanjiv Das 423,000 187.5 200 1,586,250 1,600,000 Tami Rosen 423,000 187.5 100 793,125 300,000 Avital Pardo 1,000,000 187.5 100 1,875,000 400,000 Long-Term Incentive Compensation When it considered 2025 equity compensation decisions, the Compensation Committee reviewed the market data provided by Semler Brossy, including equity award practices of our peer companies, our named executive officers’ outstanding equity awards, including the retention value of unvested awards, our current business strategies and projected growth, and an evaluation of each named executive officer’s responsibilities and performance, including the criticality of the executive to the future success of the Company. The Compensation Committee also took into account the recommendations of our Chief Executive Officer (except with respect to his own equity award) and the other factors described above under “Factors Used in Determining Executive Compensation.” The RSU awards granted to our named executive officers in 2025 are set forth in the table below. These RSU awards were granted in March 2025 and vest over a period of two years in eight equal quarterly installments, subject to the named executive officer’s continued service with us through each such vesting date. Our three founders (including Mr. Krubiner and Mr. Pardo) did not receive equity incentives in 2025. Name Annual RSU Award (Number of Shares) Gal Krubiner 0 Evangelos Perros 165,000 Sanjiv Das 190,000 Tami Rosen 125,000 Avital Pardo 0 Executive Employment Arrangements We have entered into employment agreements with our named executive officers. These agreements provide the initial terms of each executive’s employment with the Company; contain provisions regarding non-competition, non-solicitation, confidentiality, and assignment of inventions; and include severance provisions. Each of our named executive officers is an “at-will” employee. The terms of these agreements are described in more detail below and under “Potential Payments Upon Termination or Change in Control.” Either the Company or the named executive officer may terminate the applicable employment agreement by giving written notice to the other party. The Company may also terminate the named executive officer’s employment agreement for cause (as defined in the applicable agreement). In the case of the Chief Executive Officer, the Company’s Articles of Association require a decision by a regular majority of the directors present and voting on such matter if the termination is for cause. The Company’s Articles further provide that, until the sixth anniversary of the Company’s public offering, the Chief Executive Officer can be terminated other than for cause only by a supermajority of at least 75% of the directors then in office, and thereafter such termination shall require a decision of the Board by a regular majority of the directors present and voting on such matter. Gal Krubiner On November 12, 2024, we entered into an amended and restated employment agreement with Mr. Krubiner, our Chief Executive Officer, which provides for (i) an annual base salary of $1,000,000 and (ii) an annual cash incentive bonus determined in the discretion of the Board based on the Company’s Compensation Policy for Executive Officers and Directors (subject to shareholder approval where required). In addition, Mr. Krubiner is entitled to (i) use the service of one or more executive assistants who may assist him with personal matters, (ii) an annual allowance for personal expenses in the amount of up to $105,000 and (iii) housing accommodations and tax gross-ups for personal taxes in connection with any such 13
housing accommodations while Mr. Krubiner is in the United States and while he is traveling on behalf of the Company. Pursuant to Mr. Krubiner’s prior employment agreement and understandings with the Company, he is entitled to a 10% annual increase of his base salary each year from 2023 to 2027, which he waived in 2023, 2024, and 2025, while preserving his right to receive a compounded increase in future years. Evangelos Perros On March 12, 2025, we entered into an amended and restated employment agreement with Mr. Perros, our Chief Financial Officer, which provides for (i) an annual base salary of $650,000 and (ii) eligibility to receive an annual cash incentive bonus, with the actual amount determined in the discretion of the Company’s Chief Executive Officer and the Board based on the Company’s Compensation Policy for Executive Officers and Directors. Sanjiv Das On March 12, 2025, we entered into an amended and restated employment agreement with Mr. Das, our President, which (as amended on November 6, 2025) provides for (i) an annual base salary of $650,000, (ii) an additional annual payment of $750,000 to be paid in accordance with the Company’s regular payroll practices and (iii) eligibility to receive an annual cash incentive bonus, with the actual amount determined in the discretion of the Company’s Chief Executive Officer and the Board based on the Company’s Compensation Policy for Executive Officers and Directors. Tami Rosen On November 12, 2024, we entered into an amended and restated employment agreement with Ms. Rosen, our Chief Development Officer, which provides for (i) an annual base salary of $650,000 and (ii) eligibility to receive an annual cash incentive bonus, with the actual amount determined in the discretion of the Company’s Chief Executive Officer and the Board based on the Company’s Compensation Policy for Executive Officers and Directors. Avital Pardo On March 12, 2025, we entered into an amended and restated employment agreement with Mr. Pardo, our Chief Technology Officer, which provides for (i) a monthly base salary of NIS 288,501 and (ii) an annual cash incentive bonus determined in the discretion of the Company’s Chief Executive Officer and the Board based on the Company’s Compensation Policy for Executive Officers and Directors (subject to shareholder approval where required). In addition, Mr. Pardo is entitled to use the service of one or more executive assistants who may assist him with personal matters. Pursuant to understandings with the Company, Mr. Pardo is entitled to a 10% annual increase of his base salary each year from 2023 to 2027, which he waived in 2023, 2024, and 2025, while preserving his right to receive a compounded increase in future years. Each of our named executive officers’ employment agreement provides for certain severance payments and benefits that are described in more detail in “Potential Payments Upon Termination or Change in Control.” Other Benefits and Perquisites 401(k) Plan, Employee Stock Purchase Plan, Welfare and Health Benefits We maintain a defined contribution retirement plan that provides eligible U.S. employees, including our named executive officers, with an opportunity to save for retirement on a tax advantaged basis (the “401(k) Plan”). Our matching contribution is 50% of employee contributions and up to a $5,000 annual maximum match. Eligible employees may defer eligible compensation on a pre-tax basis, up to the statutorily prescribed annual limits on contributions under the Internal Revenue Code of 1986, as amended (the “Code”). Contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in their contributions and any employer contributions. The 401(k) Plan is intended to be qualified under Section 401(a) of the Code with the 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, employer contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan. Pagaya does not provide a pension plan for employees (other than as may be statutorily required by applicable law) and none of the named executive officers participates in a nonqualified deferred compensation plan. 14
We also offer eligible employees, including our executive officers, the opportunity to purchase our Class A Ordinary Shares at a discount under our Employee Stock Purchase Plan (the “ESPP”), which is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Pursuant to the ESPP, all eligible employees, including the eligible named executive officers, may allocate up to a specified amount of the participant’s gross earnings (as described in ESPP) for that year to purchase our Class A Ordinary Shares at a 15% discount of the lesser of (i) the market value of our Class A Ordinary Shares at the beginning of each offering period and (ii) the market value of our Class A Ordinary Shares on the applicable purchase date, subject to specified limits. In addition, we provide other health and welfare benefits to our executive officers, including the named executive officers, on the same basis as to all of our full-time employees. These benefits include, but are not limited to, medical, dental and vision benefits, medical and dependent care, flexible spending accounts, short-term and long-term disability insurance and life insurance. We also pay the premiums for term life insurance and disability insurance, subject to certain limitations, for all of our employees, including our named executive officers. We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. Additional Benefits and Perquisites In addition to the employee benefits available to all of our eligible employees, certain of our named executive officers receive additional benefits and perquisites that the Company believes are necessary and appropriate to provide a competitive compensation package to its named executive officers. These benefits and perquisites are described in more detail in the All Other Compensation column of the Summary Compensation Table and related narrative disclosure. We do not view perquisites or other personal benefits as a significant component of our executive compensation program other than for our Chief Executive Officer. For all of our named executive officers, we only provide additional benefits and perquisites where we believe it is appropriate to assist the executive in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes. For Mr. Krubiner, we believe that providing him with a housing and personal expense allowance while in New York and related tax reimbursement payments benefit the Company by ensuring his availability and permanent presence at our corporate headquarters. Perquisites and other personal benefits are reviewed by the Compensation Committee. Tax and Accounting Implications We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718 (“ASC Topic 718”) for our stock-based compensation awards. ASC Topic 718 requires companies to estimate and record an expense for each award of equity compensation (including stock options and RSUs) over the vesting period of the award. Under Section 162(m) of the Code, compensation paid to each of the Company’s “covered employees” that exceeds $1 million per taxable year is generally non-deductible unless the compensation qualifies for certain grandfathered exceptions (including the “performance-based compensation” exception) for certain compensation paid pursuant to a written binding contract in effect on November 2, 2017 and not materially modified on or after such date. Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its shareholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m) of the Code. The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) of the Code if it determines that such modifications are consistent with the Company’s business needs. Timing of Grants and Equity Awards Equity awards are typically granted in March as part of the annual total compensation review for senior leaders and other employees and are approved by the Compensation Committee on or before the grant date. The Compensation Committee’s general practice is to complete its annual executive compensation review and determine performance goals and target compensation for our named executive officers, following which the Committee approves equity awards for named executive officers as well as any other equity award recipients. On occasion, the Compensation Committee may grant equity 15
awards outside of our annual grant cycle for new hires, promotions, recognition, retention, or other purposes. While the Compensation Committee has discretionary authority to grant equity awards outside of the cycle described above, the Committee does not have a practice or policy of granting equity awards in anticipation of the release of material non-public information and does not time the release of material non-public information in coordination with grants of equity awards in a manner that intentionally affects the value of executive compensation. The Company did not grant awards of stock options, stock appreciation rights or similar option-like instruments in 2025. Accordingly, the Company has no disclosure required under Item 402(x) of Regulation S-K. Insider Trading Policy; Prohibition on Other Stock Trading Practices We maintain an Insider Trading Policy that governs the purchase, sale and other disposition of our securities by all our directors, officers and employees, and have implemented process that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and the Nasdaq listing standards. Among other things, our Insider Trading Policy prohibits all of our directors, officers and employees, including our named executive officers, from engaging in short sales, hedging of their share ownership positions and transactions involving derivative securities relating to our shares. Our Insider Trading Policy also prohibits trading during certain quarterly and certain special blackout periods. This summary of our Insider Trading Policy does not purport to be complete and is qualified in its entirety by reference to our Insider Trading Policy, a copy of which can be found as exhibit 19.1 to our 2025 Annual Report on Form 10-K. Our Insider Trading Policy includes guidelines with respect to adopting Rule 10b5-1trading plans. Under the guidelines, Rule 10b5-1 plans may only be adopted or modified during an open trading window and only when such individual does not otherwise possess material nonpublic information about the Company. Stock Ownership Guidelines The Company does not maintain formal stock ownership guidelines for directors and executive officers. Our founders, who serve as directors and executive officers, own a significant percentage of our outstanding shares and therefore the Compensation Committee has determined not to implement any ownership requirements at this time. Clawback Policy On November 29, 2023, the Compensation Committee approved an Incentive Compensation Recoupment Policy providing for the Company’s recoupment of recoverable incentive compensation that is received by covered officers of the Company under certain circumstances, in compliance with Section 10D of the Exchange Act, Rule 10D-1 promulgated thereunder and Nasdaq Listing Rule 5608. See Exhibit 97.1 to the Company’s 2025 Annual Report on Form 10-K. The Company has not recouped compensation, or attempted to recoup compensation, from any employee to date. Recovery under the Clawback Policy is mandatory and no employee misconduct is required. Analysis of Risks Presented by Our Compensation Policies and Programs The Compensation Committee has reviewed our compensation policies and practices, in consultation with Semler Brossy, to assess whether they encourage employees to take excessive or inappropriate risks. After reviewing and assessing our compensation philosophy, policies and practices, including the mix of fixed and variable, short-term and long-term incentives and overall pay, incentive plan structures, and the checks and balances built into, and oversight of, each plan and practice, the Compensation Committee determined that any risks arising from our compensation policies and practices for our employees are not reasonably likely to create risks that have a material adverse effect on the Company. The Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks; rather, it believes the mix of short-term compensation (in the form of base salary and annual performance bonuses, if any, which is based on a variety of performance factors and includes a cap on payout) and long-term compensation (in the form of RSU awards) in our executive compensation program prevents undue focus on short-term results and helps align the interests of our executive officers with the interests of our shareholders. In addition, our Insider Trading Policy protects against short-term decision-making. The Compensation Committee conducts an annual review of our compensation-related risk profile to ensure that our compensation programs do not encourage excessive or inappropriate risk- taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company. Compensation Policy Under the Israel Companies Law Under the Israel Companies Law, a public company must have a compensation policy approved by the board of directors after receiving and considering the recommendation of the company’s compensation committee. Our Compensation 16
Policy is designed to promote retention and motivation of directors and executive officers, incentivize superior individual excellence and align the interests of our directors and executive officers with our long-term performance, while simultaneously discouraging them from taking excessive risks in their pursuit of such goals. To that end, a portion of an executive officer’s compensation package is targeted to reflect our short and long-term goals, as well as the executive officer’s individual performance. On the other hand, our Compensation Policy includes measures designed to reduce the executive officer’s incentives to take excessive risks that may harm Pagaya in the long-term, such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods for equity-based compensation. The Compensation Policy also addresses Pagaya’s executive officers’ individual characteristics (such as their respective positions, education, scope of responsibilities and contribution to the attainment of its goals) as the basis for compensation variation among its executive officers and considers the internal ratios between compensation of its executive officers and directors and other employees. Pursuant to the Compensation Policy, the compensation that may be granted to an executive officer may include base salary, annual bonuses and other cash bonuses (such as a signing bonus and special bonuses), equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer’s then-current base salary. In addition, the total variable compensation components (cash bonuses and equity-based compensation) may not exceed 95% of each executive officer’s total compensation package with respect to any given calendar year. An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to Pagaya’s executive officers (other than its Chief Executive Officer) may be based on performance objectives and a discretionary evaluation of the executive officer’s overall performance by the Chief Executive Officer and may be based entirely on a discretionary evaluation, subject to the approval of the Compensation Committee and the Pagaya Board. Furthermore, Pagaya’s Chief Executive Officer will be entitled to set performance objectives for the office holders, including those who also serve as directors, and for those office holders who are also directors such performance objectives will be further approved by the Compensation Committee and by the Pagaya Board. The measurable performance objectives of Pagaya’s Chief Executive Officer will be determined annually by the Compensation Committee and the Pagaya Board and will include the weight to be assigned to each achievement in the overall evaluation. A less significant portion of the Chief Executive Officer’s annual cash bonus may be based on a discretionary evaluation of the Chief Executive Officer’s overall performance by the Compensation Committee and the Pagaya Board based on quantitative and qualitative criteria. The equity-based compensation under the Compensation Policy for Pagaya’s executive officers is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus. Primary objectives include enhancing the alignment between the executive officers’ interests and Pagaya’s long-term interests and those of its shareholders and strengthening the retention and the motivation of executive officers in the long-term. The Compensation Policy provides for executive officer compensation in the form of share options or other equity-based awards, such as restricted shares and restricted share units, in accordance with its share incentive plan then in place. All equity-based incentives granted to executive officers shall be subject to vesting periods in order to promote long-term retention of the awarded executive officers. Equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the executive officer. In addition, the Compensation Policy contains compensation recovery provisions which allows Pagaya under certain conditions to recover bonuses paid in excess, enables its Chief Executive Officer to approve immaterial changes in the terms of employment of an executive officer (provided that the changes of the terms of employment are in accordance our Compensation Policy) and allows Pagaya to exculpate, indemnify and insure its executive officers and directors subject to certain limitations as set forth therein. The Compensation Policy also provides for compensation to the members of the Pagaya Board either (i) in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director), 5760-2000, subject to the exemptions afforded by the Companies Regulations (Relief for Public Companies Whose Securities are Listing for Trading on a Stock Exchange Outside of Israel), 5760-2000, as such regulations may be amended from time to time, if Pagaya at any time is required or elects to appoint external directors, or (ii) in accordance with the amounts determined in the Compensation Policy and subject to applicable law. 17
This summary is qualified in its entirety by reference to the Company’s Compensation Policy for Executive Officers and Directors, which is filed as Exhibit 10.5 to the Company’s 2025 Annual Report on Form 10-K. Compensation Committee Interlocks and Insider Participation Mr. Zeevi and Mr. Petrozzo each served as members of the Compensation Committee in 2025. All members of the Compensation Committee were independent directors. No member of the Compensation Committee, while serving on the Compensation Committee, was at any time during 2025 an officer or employee of the Company, and no member of the Committee had any relationship requiring disclosure under Item 404 of Regulation S-K. During fiscal year 2025, none of our executive officers served on the board of directors or compensation committee of any company where one of that company’s executive officers served as one of our directors. 2026 Executive Compensation Program Changes In 2026, the Compensation Committee extended the grant of RSUs to our three founders, including Mr. Krubiner, Mr. Pardo, and Yahav Yulzari. The Compensation Committee made this decision considering the Company’s growth and profitability trajectory and the other factors described above under “Factors Used in Determining Executive Compensation.” The Committee also considered that our three founders have not received additional equity since 2021, well before we became a public company. Following these changes, and moving forward, all members of our senior leadership will have a pay structure consisting of base salary, target bonus level, and an annual equity grant, which the Committee believes is consistent with general market practice and benefits our shareholders by ensuring our compensation program is designed to attract and retain top talent in a competitive industry. 18
Compensation Committee Report The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in the Company’s Annual Report on Form 10-K. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 2025 Annual Report on Form 10-K. The Compensation Committee Avi Zeevi (Chair) Dan Petrozzo April 30, 2026 The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 19
Summary Compensation Table The table below provides information with respect to the fiscal years ended December 31, 2025, December 31, 2024 and December 31, 2023 regarding the compensation of the named executive officers (who are also our five most highly- compensated “office holders” within the meaning of the Israel Companies Law). Name Year Salary ($) Stock Awards ($)(1) Option Awards ($)(1)(2) Non-Equity Incentive Plan Compensation (3) All Other Compensation ($)(7) Total ($) Gal Krubiner 2025 1,000,000 — — 3,500,000 1,519,560 6,019,560 Chief Executive Officer 2024 1,000,000 — — 2,500,000 1,204,773 4,704,773 2023 1,000,000 — — 2,000,000 650,000 3,650,000 Evangelos Perros 2025 650,000 1,689,600 — 1,000,000 11,742 3,351,342 Chief Financial Officer(4) 2024 608,000 2,915,300 — 901,000 5,060 4,429,360 Sanjiv Das 2025 1,400,000 1,945,600 — 1,600,000 25,112 4,970,712 President(5) 2024 1,400,000 728,825 6,206,252 1,100,000 26,785 9,461,862 Tami Rosen 2025 650,000 1,280,000 — 300,000 126,211 2,356,211 Chief Development Officer 2024 650,000 1,822,063 — 600,000 131,770 3,203,833 2023 650,000 1,515,000 — 400,000 11,243 2,576,243 Avital Pardo 2025 982,121 — — 400,000 172,926 1,555,047 Deputy Chief Executive Officer(6) 2024 1,130,127 — — — 121,854 1,251,981 (1) Amounts reflect the full grant-date fair value of restricted stock units (“RSUs”) or options calculated in accordance with ASC Topic 718 as stock-based compensation in our consolidated financial statements. The assumptions we used in valuing RSUs are described in Note 12 to our consolidated financial statements included in our 2025 Annual Report on Form 10-K and do not necessarily correspond to the actual economic value recognized or that may be recognized by the named executive officers. (2) For Mr. Das, represents the grant-date fair value of his total option award in 2024 with a 4-year vesting schedule. (3) Amounts reflect the annual performance bonus as determined by the Compensation Committee and the Board, based on performance during the respective fiscal year and actually paid to the named executive officer in the following year. Amounts in this column were included in the “Bonus” column in prior years in the years when actually paid. (4) Mr. Perros has served as our Chief Financial Officer since February 2024. (5) Mr. Das has served as our President since October 2023. In addition to his regular salary, Mr. Das receives an additional annual payment of $750,000 paid in equal installments in accordance with the Company’s normal payroll practices, as set forth in Mr. Das’s employment agreement, and as described in the Compensation Discussion and Analysis. (6) Mr. Pardo receives his salary in Israeli shekels. The salary amounts for Mr. Pardo reflect the total amount he received in salary payments in 2025 and 2024 converted to US dollars using the average exchange rates during those years (3.453:1 in 2025 and 3.699 in 2024). Mr. Pardo’s 2025 annual cash incentive bonus was calculated in US dollars and he received it in Israeli shekels. (7) Includes the following for 2025: for Mr. Krubiner, housing expenses ($581,545) and a related tax reimbursement payment ($508,209), ground transportation ($113,830), reimbursement of personal expenses ($105,000) and a related tax reimbursement payment ($122,496), as provided under his employment agreement or otherwise approved by the Compensation Committee, personal administrative support ($83,215), company-paid life insurance premiums ($266), and company matching 401(k) contributions ($5,000); for Mr. Perros, admission to a sporting event ($288), a gift ($6,188), company-paid life insurance premiums ($266), and company matching 401(k) contributions ($5,000); for Mr. Das, personal administrative support ($11,510), a gift ($8,336), company-paid life insurance premiums ($266), and company matching 401(k) contributions ($5,000); for Ms. Rosen, housing expenses ($117,945), a gift ($3,000), company-paid life insurance premiums ($266), and company matching 401(k) contributions ($5,000); and for Mr. Pardo, housing expenses ($83,625), ground transportation ($68,276), and personal administrative support ($21,025). The amount for Mr. Krubiner in 2024 has been updated to reflect an additional $173,810 in housing expenses, and $205,705 and $122,614 in tax reimbursement payments related to housing and personal expenses, respectively. Personal administrative support was valued based on the incremental cost to the Company determined by multiplying the respective employees’compensation by the percentage of working time spent on personal matters. 20
Grants of Plan-Based Awards The following table shows grants of plan-based awards to our named executive officers during the fiscal year ended December 31, 2025. Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) All Other Stock Awards: Number of Shares of Stock or Units (#) All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($) Grant Date Fair Value of Stock Awards ($)(2)Name Grant Date Approval Date Threshold ($) Target ($) Max ($) Gal Krubiner 637,500 1,000,000 3,993,000 — — — — Evangelos Perros 269,663 423,000 1,950,000 — — — — 3/12/2025 3/12/2025 165,000 — — 1,690,000 Sanjiv Das 269,663 423,000 1,950,000 — — — — 3/12/2025 3/12/2025 190,000 — — 1,946,000 Tami Rosen 269,663 423,000 1,950,000 — — — — 3/12/2025 3/12/2025 125,000 — — 1,280,000 Avital Pardo 637,500 1,000,000 3,993,000 — — — — (1) Reflects threshold, target and maximum potential payments for awards granted under the Company’s annual bonus plan, prior to final adjustments by the Compensation Committee and the Board. Threshold represents 75% attainment of the performance component and 85% attainment of the individual component. Target represents 100% attainment of both the performance and individual components. Maximum represents the maximum potential annual bonus payout under our Compensation Policy of 300% of the named executive officer’s annual base salary. (2) Amounts reflect the full grant-date fair value of restricted stock units (“RSUs”) calculated in accordance with ASC Topic 718. The assumptions we used in valuing RSUs are described in Note 12 to our consolidated financial statements included in our 2025 Annual Report on Form 10-K and do not necessarily correspond to the actual economic value recognized or that may be recognized by the named executive officers. The RSUs were granted under the Company’s 2022 Share Incentive Plan and vest over a period of two years in eight equal quarterly installments, subject to the named executive officers’ continued service with us through each applicable vesting date. 21
Outstanding Equity Awards at Fiscal Year End The following table presents information regarding outstanding equity awards held by our named executive officers as of December 31, 2025. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Number of Securities Underlying Unexercised Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)(1) (Exercisable) (Unexercisable) Gal Krubiner(2) 582,680 — 0.44 8/11/2030 4,577,942 915,588 18.96 3/17/2031 Evangelos Perros(3) 14,311 — 12.24 2/24/2033 113,828 2,379,005 11,845 — 51.36 12/29/2031 103,125 2,155,313 Sanjiv Das(4) 175,000 525,000 15.00 10/16/2034 8,538 178,444 118,750 2,481,875 Tami Rosen(5) 203,448 — 10.68 3/17/2031 78,125 1,632,813 18,665 — 10.68 6/27/2031 15,634 — 12.24 2/24/2033 24,266 14,596 51.36 12/29/2031 Avital Pardo(6) 582,680 — 0.44 8/11/2030 6,866,894 1,373,379 18.96 3/17/2031 (1) Based on $20.90 per share, the closing price of our Class A Ordinary Shares on December 31, 2025. (2) Represents (i) 582,680 outstanding options that were fully vested and exercisable as of December 31, 2025 and (ii) 5,493,530 outstanding options of which 4,577,942 were fully vested and exercisable as of December 31, 2025 and 915,588 that were scheduled to vest and become exercisable after attaining the remaining performance goal specified in the option agreement. (3) Represents (i) 14,311 outstanding options that were fully vested and exercisable as of December 31, 2025, (ii) 11,845 outstanding options that were fully vested and exercisable as of December 31, 2025, (iii) 113,828 RSUs that were scheduled to vest in equal quarterly installments on January 1, 2026, April 1, 2026, July 1, 2026, October 1, 2026, and January 1, 2027, and (iv) 103,125 RSUs that were scheduled to vest in equal quarterly installments on March 12, 2026, June 12, 2026, September 12, 2026, December 12, 2026, and March 12, 2027. (4) Represents (i) 700,000 outstanding options of which 175,000 were fully vested and exercisable as of December 31, 2025 and 525,000 that were scheduled to vest and become exercisable in equal annual installments on October 16, 2026, October 16, 2027, and October 16, 2028, (ii) 8,538 RSUs that were scheduled to vest on January 1, 2026, and (iv) 118,750 RSUs that were scheduled to vest in equal quarterly installments on March 12, 2026, June 12, 2026, September 12, 2026, December 12, 2026, and March 12, 2027. (5) Represents (i) 203,448 outstanding options that were fully vested and exercisable as of December 31, 2025, (ii) 18,665 outstanding options that were fully vested and exercisable as of December 31, 2025, (iii) 15,634 outstanding options that were fully vested and exercisable as of December 31, 2025, (iv) 38,862 outstanding options of which 24,266 were fully vested and exercisable as of December 31, 2025 and 8,627 that were scheduled to vest and become exercisable on March 31, 2026 and 5,969 that were scheduled to vest and become exercisable after attaining the remaining performance goal specified in the option agreement, and (v) 78,125 RSUs that were scheduled to vest in equal quarterly installments on March 12, 2026, June 12, 2026, September 12, 2026, December 12, 2026, and March 12, 2027. (6) Represents (i) 582,680 outstanding options that were fully vested and exercisable as of December 31, 2025, and (ii) 8,240,273 outstanding options of which 6,866,894 were fully vested and exercisable as of December 31, 2025 and 1,373,379 that were scheduled to vest and become exercisable after attaining the remaining performance goal specified in the option agreement. 22
Option Exercises and Stock Vested The following table shows options exercised and stock awards vested for our named executive officers for the fiscal year ended December 31, 2025. Option Awards Stock Awards Name Number of Shares Acquired on Exercise Value Realized on Exercise ($)(1) Number of Shares Acquired on Vesting Value Realized on Vesting ($)(2) Gal Krubiner — — — — Evangelos Perros — — 179,891 3,581,326 Sanjiv Das — — 205,606 4,212,483 Tami Rosen 15,196 344,284 176,349 2,899,572 Avital Pardo — — — — (1) Represents the difference between the exercise price and the market price of our Class A Ordinary Shares on the exercise date. (2) Represents the market price of our Class A Ordinary Shares on the vesting date. 23
Potential Payments Upon Termination or Change in Control Each of our named executive officers’ employment agreement provides for severance payments and benefits upon a termination of the named executive officer’s employment without cause or due to his or her death or disability or the named executive officer’s resignation for good reason (each term as defined in the relevant employment agreement). We do not provide any “single-trigger” change in control benefits or tax payments or “gross ups” in connection with severance or a change in control transaction. The Compensation Committee approved these severance payments and benefits, after a review of competitive market data provided by Semler Brossy, to ensure that the payments and benefits remain appropriately structured and at reasonable levels. The Compensation Committee believes that these severance protections are necessary to provide stability among our executives, which is important from a retention perspective, serve to focus our executive officers on our business operations, and avoid distractions in connection with a potential change in control transaction or period of uncertainty. A more detailed description of our named executive officer severance and change in control payments and benefits is provided below. Our employment agreements with the named executive officers provide that, in the event that one of our named executive officers’ employment is terminated other than in the circumstances described below, subject to such named executive officer or their estate executing and not revoking a general release, our named executive officers would be entitled to a pro-rated annual cash incentive bonus. In addition, our named executive officers or we may terminate employment with us by providing a notice to the other party (i) in the case of Mr. Perros, Mr. Das and Ms. Rosen, a 90-day notice by the named executive officer or a 30-day notice by us, (ii) in the case of Mr. Pardo, a 180-day notice by either Mr. Pardo or us and (iii) in the case of Mr. Krubiner, a 180-day notice by Mr. Krubiner or a 30-day notice by us. Our employment agreements with the named executive officers also provide that, in the event that one of our named executive officers’ employment is terminated by the Company without cause or by the executive for good reason, subject to such executive’s executing and not revoking a general release and complying with 12-month post-employment covenants not to compete or to solicit employees, customers or clients, our named executive officers would be entitled to: ● For Mr. Krubiner and Mr. Pardo: (i) 12 months of base salary continuation, (ii) a pro-rated annual cash incentive bonus at target and (iii) for Mr. Krubiner, Company payment of a portion of COBRA premiums for up to 12 months so that the cost for coverage is commensurate with active employees, and for Mr. Pardo, payment of the cost to maintain private health insurance coverage for 12 months. ● For Ms. Rosen, Mr. Perros and Mr. Das: (i) 6 months of base salary continuation, (ii) a pro-rated annual cash incentive bonus at target and, for Mr. Perros and Mr. Das, any unpaid prior year bonus at target and (iii) Company payment of a portion of COBRA premiums for up to 6 months so that the cost for coverage is commensurate with active employees. Notwithstanding the foregoing, in the event such termination by the Company without cause or by the executive for good reason occurs within twelve months immediately following a change in control transaction, subject to such executive’s executing and not revoking a general release and complying with 12-month post-employment covenants not to compete or to solicit employees, customers or clients, our named executive officers would be entitled to: ● For Mr. Krubiner and Mr. Pardo: (a) a lump sum payment in the amount of 18 months of base salary, (b) a full annual cash incentive bonus at target plus, for Mr. Krubiner, any unpaid prior year bonus at target, (c) for Mr. Krubiner, Company payment of a portion of COBRA premiums for up to 12 months so that the cost for coverage is commensurate with active employees, and for Mr. Pardo, payment of the cost to maintain private health insurance coverage for 12 months, and (d) accelerated vesting of all outstanding equity awards. ● For Ms. Rosen, Mr. Perros and Mr. Das: (a) a lump sum payment in the amount of 12 months of base salary, (b) a full annual cash incentive bonus at target plus any unpaid prior year bonus at target, (c) Company payment of a portion of COBRA premiums for up to 12 months so that the cost for coverage is commensurate with active employees, and (d) accelerated vesting of all outstanding equity awards. Notwithstanding anything to the contrary, if payments and benefits provided to the named executive officers (other than Mr. Pardo, who resides outside of the United States) become subject to Sections 280G and 4999 of the Code, the payments will be reduced if the reduction would leave the named executive officer financially better off on an after-tax basis than if the named executive officer received the entire payment and was obligated to pay the excise tax under Code Section 4999. 24
The following table sets forth the amounts that our named executive officers would be entitled to receive following a termination without cause or for good reason as described above, not within twelve months immediately following a change in control transaction, assuming they terminated employment on December 31, 2025: Post Termination Payment Eligibility - Non Change in Control ($) Gal Krubiner Evangelos Perros Sanjiv Das Tami Rosen Avital Pardo Cash Payments Related to Salary(1) 1,331,000 325,000 325,000 325,000 1,331,000 Cash Payments Related to Bonus 1,000,000 423,000 423,000 423,000 1,000,000 Health Benefits 46,995 46,995 31,288 39,352 31,366 Total 2,377,995 794,995 779,288 787,352 2,362,366 (1) For Mr. Krubiner and Mr. Pardo, this amount is based on the annual base salaries they were entitled to receive in 2025 before waiving any amounts. The following table sets forth the amounts that our named executive officers would be entitled to receive following a termination without cause or for good reason as described above, within twelve months immediately following a change in control transaction, assuming they terminated employment on December 31, 2025: Post Termination Payment Eligibility - Change in Control ($) Gal Krubiner Evangelos Perros Sanjiv Das Tami Rosen Avital Pardo Cash Payments Related to Salary(1) 1,996,500 650,000 650,000 650,000 1,996,500 Cash Payments Related to Bonus 1,000,000 423,000 423,000 423,000 1,000,000 Health Benefits 46,995 46,995 31,288 39,352 31,366 Equity Award Vesting Acceleration(2) 1,776,241 4,534,318 5,757,819 1,632,813 2,664,355 Total 4,819,736 5,654,313 6,862,107 2,745,165 5,692,221 (1) For Mr. Krubiner and Mr. Pardo, this amount is based on the annual base salaries they were entitled to receive in 2025 before waiving any amounts. (2) Represents the value of unvested stock options and restricted stock units that would have become vested following a termination without cause or for good reason as described above, within twelve months immediately following a change in control transaction, based on $20.90 per share, the closing price of our Class A Ordinary Shares on December 31, 2025. The following table sets forth the amounts that our named executive officers would be entitled to receive following a termination other than in the circumstances described in the two preceding tables: Post Termination Payment Eligibility - All Other Terminations ($) Gal Krubiner Evangelos Perros Sanjiv Das Tami Rosen Avital Pardo Cash Payments Related to Bonus(1) 3,500,000 1,000,000 1,600,000 300,000 400,000 Total 3,500,000 1,000,000 1,600,000 300,000 400,000 (1) Reflects the annual cash incentive bonus that each named executive officer earned for 2025. 25
Non-Employee Director Compensation In 2022, our shareholders approved a non-employee director compensation package which provides that, upon the commencement of a new term, non-employee directors of Pagaya (other than the Chairperson of the Board) receive (i) $40,000 in annual cash fees, (ii) an additional $10,000 in annual cash fees for the chair of any committee of the Board and (iii) an annual equity award with a target grant date value of $300,000, which will vest in equal quarterly installments over one year. The Chairperson of the Board receives $250,000 in annual cash fees, plus the same equity award as described in clause (iii) above. Director Compensation Table The following table shows for the fiscal year ended December 31, 2025 certain information with respect to the compensation of our non-employee directors. Amounts are rounded to the nearest thousand. Name Fees Earned or Paid in Cash ($)(1) Stock Awards ($)(2) Total ($) Avi Zeevi 250,000 282,602 532,602 Dan Petrozzo 50,000 282,602 332,602 Harvey Golub 40,000 282,602 322,602 Alison Davis 40,000 282,602 322,602 Asheet Mehta 40,000 282,602 322,602 (1) Consistent with the non-employee director compensation package described above, the differences in the amounts shown above among non-employee directors reflect committee service (or lack thereof), which varies among directors. (2) Amounts reflect the full grant-date fair value of restricted stock units (“RSUs”) calculated in accordance with ASC Topic 718. The assumptions we used in valuing RSUs are described in Note 12 to our consolidated financial statements included in our 2025 Annual Report on Form 10-K and do not necessarily correspond to the actual economic value recognized or that may be recognized by the non-employee directors. As of December 31, 2025, our non-employee directors had the following equity awards outstanding: Mr. Zeevi (183,413 stock options and 11,446 RSUs); Mr. Petrozzo (141,372 stock options and 11,446 RSUs); Mr. Golub (234,022 stock options and 11,446 RSUs); Ms. Davis (11,446 RSUs); and Mr. Mehta (11,446 RSUs). In addition to the non-employee directors listed above, Mr. Krubiner, the Company’s Chief Executive Officer, Mr. Pardo, the Company’s Deputy Chief Executive Officer, Mr. Yulzari, the Company’s Deputy Chief Executive Officer, and Ms. Rosen, the Company’s Chief Development Officer, were each executive officers of the Company in 2025 and members of the Board but did not receive any additional compensation for services provided as a director in 2025. The compensation for the foregoing directors with respect to their roles as executive officers of the Company in 2025 is set forth in the Summary Compensation Table. CEO Pay Ratio Under SEC rules, we are required to provide information regarding the relationship between the total annual compensation of our CEO, Mr. Krubiner, and the median of total annual compensation of all employees (other than Mr. Krubiner). For our last completed year ended December 31, 2025: ● The median total annual compensation of all employees (other than Mr. Krubiner) was identified as $145,277 using the methodology described below. ● Mr. Krubiner’s total annual compensation, as reported in the Summary Compensation Table included in this Annual Report on Form 10-K, was $6,019,560. ● Based on the above, for 2025, the ratio of Mr. Krubiner’s total annual compensation to the median of the total annual compensation of all employees was approximately 41 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K and is based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratios. Accordingly, the pay ratios disclosed by other companies may not be comparable to our pay ratio as disclosed above. The methodology we used to calculate the pay ratio is as follows: 26
● We determined the median of the total annual compensation of our employees as of December 31, 2025, at which time we (including our consolidated subsidiaries) had 518 full-time employees, 242 of whom were located in the United States, and 276 of whom were located in Israel. We excluded Mr. Krubiner and included employees of our consolidated subsidiaries. ● To determine the median employee, we then compared the amount of salary, wages and tips of our employees, as reflected in our payroll records for the year ended December 31, 2025. In determining the median total compensation of all employees, we did not make any cost-of-living adjustments to the wages paid to any employee. ● We determined the median employee’s total annual compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, yielding the median total annual compensation disclosed above. With respect to Mr. Krubiner’s total annual compensation, we used the amount reported in the “Total” column of the 2025 Summary Compensation Table included in this Annual Report on Form 10-K. Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA is defined as Net Income (Loss) Attributable to Pagaya Technologies Ltd. excluding share-based compensation expense, change in fair value of contingent liability, change in fair value of warrant liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions and other one-time expenses, interest expense, income tax expense (benefit), and depreciation and amortization. These items are excluded from our Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items are unpredictable, are not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to- period comparisons of our business performance. Moreover, we have included Adjusted EBITDA in this Annual Report on Form 10-K because it is a key measurement used by our management internally to make operating decisions, evaluate performance, and perform strategic planning and annual budgeting. However, this non-GAAP financial measure is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with U.S. GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. The following table presents a reconciliation of Adjusted EBITDA to Net Income (Loss) Attributable to Pagaya Technologies Ltd., the most directly comparable U.S. GAAP measure ($ in thousands, unless otherwise noted): Year Ended December 31, 2025 2024 2023 Net Income (Loss) Attributable to Pagaya Technologies Ltd. $ 81,389 $ (401,406) $ (128,438) Adjusted to exclude the following: Share-based compensation 54,118 61,497 71,055 Fair value adjustment to contingent liability (5,907) — — Fair value adjustment to warrant liability 3,830 (2,349) 1,842 Impairment loss on certain investments, net 98,321 394,484 52,381 Write-off of capitalized software and other assets 4,920 3,245 1,938 Restructuring expenses 1,392 3,583 5,450 Transaction-related expenses 23 2,095 6,153 Non-recurring expenses (1) 37,232 5,717 6,175 Adjusted Net Income $ 275,318 $ 66,866 $ 16,556 Adjusted to exclude the following: Interest expenses 85,337 90,183 30,740 Income tax (benefit) expense (19,745) 24,576 15,571 Depreciation and amortization 30,077 28,753 19,155 Adjusted EBITDA $ 370,987 $ 210,378 $ 82,022 (1) 2025 amount includes a loss of $24.8 million from extinguishment of debt. 27
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of December 31, 2025 about our Ordinary Shares which may be issued upon the exercise of options, warrants and rights granted to employees, consultants, or members of the Board under all of our equity compensation plans, including 2022 Share Incentive Plan and the 2023 Employee Stock Purchase Plan. Column (A) Column (B) Column (C) Plan Category Number Of Securities To Be Issued Upon Exercise Of Outstanding Options, Warrants And Rights (#) Weighted-average Exercise Price Of Outstanding Options, Warrants And Rights ($) Number Of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (#) (Excluding Securities Reflected In Column (A)) Equity Compensation Plans Approved By Security Holders(1) 25,232,871 17.55(2) 10,569,673(3) Equity Compensation Plans Not Approved By Security Holders — — — Total 25,232,871 17.55 10,569,673 (1) These plans consist of our 2022 Share Incentive Plan and our 2023 Employee Stock Purchase Plan. (2) Reflects the weighted-average exercise price of outstanding stock options and options to purchase restricted shares granted under the 2022 Share Incentive Plan. (3) Includes shares remaining available for issuance under the 2023 Employee Stock Purchase Plan. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information regarding the beneficial ownership of Pagaya’s voting securities as of March 1, 2026, by: ● each person known by Pagaya to beneficially own more than 5% of the outstanding shares of Pagaya; ● each of Pagaya’s directors and named executive officers; and ● all of Pagaya’s current executive officers and directors as a group. Unless otherwise indicated, Pagaya believes that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them. Except as otherwise noted herein, the number and percentage of the Ordinary Shares (as defined below) beneficially owned is determined in accordance with Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, a person is deemed to be a beneficial owner of a security if that person has sole or shared voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. In determining beneficial ownership percentages, Pagaya deems Class A ordinary shares, no par value (“Class A Ordinary Shares”), and Class B ordinary shares, no par value (the “Class B Ordinary Shares” and, collectively with the Class A Ordinary Shares, the “Ordinary Shares”) that a shareholder has the right to acquire, including the Ordinary Shares issuable pursuant to options that are currently exercisable or exercisable within 60 days of March 1, 2026, if any, and any restricted stock units vesting within 60 days of March 1, 2026, if any, to be outstanding and to be beneficially owned by the person with such right to acquire additional Ordinary Shares for the purposes of computing the percentage ownership of that person (including in the total when calculating the applicable beneficial owner’s percentage of ownership), but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise stated, the address of each named executive officer and director is c/o Pagaya Technologies Ltd., 335 Madison Avenue, New York, NY 10017. The calculation of the percentage of beneficial ownership is based on 2,027,147 outstanding Series A preferred shares, 71,237,859 outstanding Class A Ordinary Shares, and 11,288,577 outstanding Class B Ordinary Shares, as of March 1, 2026. 28
Ordinary Shares Name and Address of Beneficial Owner Class A Ordinary Shares Class A % Class B Ordinary Shares Class B % % of Total Voting Power Five Percent Holders: Oak HC/FT Partners II, L.P.(1) 4,215,672 5.8 % — — % 2.2 % Gal Krubiner(2) 523,076 * 10,665,384 61.4 % 43.4 % Yahav Yulzari(3) — — % 9,922,774 57.1 % 40.2 % Avital Pardo(4) — — % 11,675,792 58.1 % 42.6 % Directors and Named Executive Officers of Pagaya: Gal Krubiner(2) 523,076 * 10,665,384 61.4 % 43.4 % Yahav Yulzari(3) — — % 9,922,774 57.1 % 40.2 % Avital Pardo(4) — — % 11,675,792 58.1 % 42.6 % Sanjiv Das(5) 328,736 * — — % * Harvey Golub(6) 480,660 * — — % * Daniel Petrozzo(7) 240,546 * — — % * Avi Zeevi(8) 338,152 * — — % * Tami Rosen(9) 329,778 * — — % * Evangelos Perros(10) 169,759 * — — % * Alison Davis(11) 24,474 * — — % * Asheet Mehta(12) 24,474 * — — % * All Directors and Executive Officers of Pagaya as a Group (11 persons) 2,459,655 3.4 % 32,263,950 100.0 % 81.9 % * Less than one percent. (1) Represents (i) 2,188,525 Class A Ordinary Shares and (ii) 2,027,147 Series A Preferred Shares that are convertible into Class A Ordinary Shares. Investment and voting power of the shares is exercised by Ann Lamont and Andrew Adams. The business address of Oak HC/FT is 2200 Atlantic Street, Suite 300, Stamford, Connecticut, 06902, USA. (2) Represents (i) 1,864,185 Class B Ordinary Shares, (ii) 523,076 Class A Ordinary Shares, (iii) 2,724,989 Class B Ordinary Shares held in trust for Gal Krubiner by Hamilton Trust Company of South Dakota LLC, as Trustee of the Azure Sea Trust (in trust for Gal Krubiner), (iv) 5,160,622 vested options to acquire Class B Ordinary Shares and (v) 915,588 options subject to performance-based vesting that may be exercised into restricted Class B Ordinary Shares. Such performance-based options are not subject to any continued employment vesting condition. Of the reported Class A Ordinary Shares, 500,000 shares have been pledged as security for the repayment by Mr. Krubiner of a line of credit. (3) Represents (i) 3,846,564 Class B Ordinary Shares, (ii) 5,160,622 vested options to acquire Class B Ordinary Shares and (iii) 915,588 options subject to performance-based vesting that may be exercised into restricted Class B Ordinary Shares. Such performance-based options are not subject to any continued employment vesting condition. (4) Represents (i) 802,961 Class B Ordinary Shares, (ii) 2,049,878 Class B Ordinary Shares held in Adams Holdings Group Limited and beneficially owned by Avital Pardo, (iii) 7,449,574 vested options to acquire Class B Ordinary Shares and (iv) 1,373,379 options subject to performance-based vesting that may be exercised into restricted Class B Ordinary Shares. Such performance-based options are not subject to any continued employment vesting condition. (5) Represents (i) 129,986 Class A Ordinary Shares, (ii) 175,000 vested options to acquire Class A Ordinary Shares, and (iii) 23,750 RSUs that will vest within 60 days of March 1, 2026. (6) Represents (i) 243,776 Class A Ordinary Shares, (ii) 205,747 vested options to acquire Class A Ordinary Shares, (iii) 2,862 RSUs that will vest within 60 days of March 1, 2026, and (iv) 28,275 options subject to performance-based vesting that may be exercised into restricted Class A Ordinary Shares. (7) Represents (i) 96,312 Class A Ordinary Shares, (ii) 117,810 vested options to acquire Class A Ordinary Shares, (iii) 2,862 RSUs that will vest within 60 days of March 1, 2026, and (iv) 23,562 options subject to performance-based vesting that may be exercised into restricted Class A Ordinary Shares. The address of Mr. Petrozzo is 35 Barron Hill Road, Easton, Pennsylvania, 18042, USA. 29
(8) Represents (i) 151,877 Class A Ordinary Shares, (ii) 144,086 vested options to acquire Class A Ordinary Shares, (iii) 2,862 RSUs that will vest within 60 days of March 1, 2026, and (iv) 30,569 options subject to performance-based vesting that may be exercised into restricted Class A Ordinary Shares. (9) Represents (i) 37,544 Class A Ordinary Shares, (ii) 270,640 vested options to acquire Class A Ordinary Shares, (iii) 15,625 RSUs that will vest within 60 days of March 1, 2026, and (iv) 5,969 options subject to performance-based vesting that may be exercised into restricted Class A Ordinary Shares. (10) Represents (i) 100,212 Class A Ordinary Shares, (ii) 26,156 vested options or options that will vest within 60 days of March 1, 2026 to acquire Class A Ordinary Shares, and (iii) 43,391 RSUs that will vest within 60 days of March 1, 2026. (11) Represents (i) 21,612 Class A Ordinary Shares, and (ii) 2,862 RSUs that will vest within 60 days of March 1, 2026. (12) Represents (i) 21,612 Class A Ordinary Shares, and (ii) 2,862 RSUs that will vest within 60 days of March 1, 2026. Voting Rights Each Class A Ordinary Share is entitled to one vote per share and each Class B Ordinary Share is be entitled to ten votes per share. For additional information about our dual class structure, see Exhibits 3.1 and 4.9 to the Company’s 2025 Annual Report on Form 10-K. Change in Control Arrangements We are not aware of any arrangement that may at a subsequent date, result in a change of control of the Company. Item 13. Certain Relationships and Related Transactions, and Director Independence. Related Party Transactions Approval of Related Party Transactions The Israel Companies Law requires that an “office holder” (as defined in the Israel Companies Law) of a company promptly disclose any personal interest that he or she may have and all related material information known to him or her, in connection with any existing or proposed transaction of the company. Each of our directors and executive officers is an “office holder” under the Israel Companies Law and Pagaya’s Related Person Transactions Policy. Pagaya’s Related Person Transactions Policy also applies to holders of 5% or more of Pagaya’s outstanding share capital or voting rights (“5% Holders” and collectively with Pagaya’s office holders and director nominees, the “Covered Persons”) and with respect to transactions in which a Covered Person has a direct or indirect personal interest, including a personal interest of a relative of such Covered Person and a personal interest of an entity in which such Covered Person or a relative of such Covered Person is an interested party (as defined in the Israel Companies Law). Pursuant to the Israel Companies Law and Pagaya’s Related Person Transactions Policy, the Audit and Finance Committee shall determine whether any transaction with a Covered Person in which the Covered Person has a personal interest (other than, with respect to a Covered Person who is an office holder, such office holder’s terms of office and employment) is an “extraordinary transaction” (defined as a transaction not in the ordinary course of business, not on market terms or likely to have a material impact on the Company’s profitability, assets or liabilities). Pursuant to the Israel Companies Law, the Articles of Association and Pagaya’s Related Person Transactions Policy, in the event that the Audit and Finance Committee determines that the transaction is an extraordinary transaction, Audit and Finance Committee and Board approval are required and, in some circumstances, shareholder approval may also be required; if however, it is determined that the transaction is not an extraordinary transaction, the transaction will not require Board or shareholder approval. A Related Person Transaction may only be approved if it is determined to be in the best interests of Pagaya. The Company should normally not commit to a Related Person Transaction for a term of more than three years without the right to review and re-negotiate its terms and provisions at least once every three years. A person with a personal interest in the matter generally may not be present at meetings of the Board or certain committees where the matter is being considered and, if a member of the Board or a committee, may generally not vote on the matter. Registration Rights Agreement 30
In connection with the business combination with EJF Acquisition Corp (the “EJFA Merger”), each of Pagaya, Wilson Boulevard LLC, a Delaware limited liability company and certain Pagaya shareholders as of immediately prior to the EJFA Merger entered into a Registration Rights Agreement, pursuant to which Pagaya agreed to file a registration statement, by no later than 30 days following the date of the closing of the EJFA Merger, to register the resale of the Registrable Securities (as defined in the Registration Rights Agreement). The Registration Rights Agreement also provides the Pagaya shareholder parties thereto with a demand right for Pagaya to conduct an underwritten offering of the Registrable Securities, provided that the total offering price of all securities proposed to be sold in such offering exceeds $75 million in the aggregate and subject to certain limitations. The Registration Rights Agreement further provides customary registration rights to the Pagaya shareholder parties thereto (including demand rights and piggy-back rights, subject to cooperation and cut-back provisions) with respect to Class A Ordinary Shares, any Class A Ordinary Shares issuable upon the exercise of Warrants and any other equity security of Pagaya issued or issuable with respect to any such Class A Ordinary Shares. The Registration Rights Agreement terminates on the earliest of (a) the tenth anniversary of the date of the Registration Rights Agreement, (b) any acquisition of Pagaya after the EJFA Merger, as a result of which the Registrable Securities are converted into the right to receive consideration consisting solely of cash or other property other than securities listed on a national securities exchange registered under Section 6 of the Exchange Act or (c) with respect to any Pagaya shareholder party to the Registration Rights Agreement, on the date that such Pagaya shareholder no longer holds any Registrable Securities. For more information on the Registration Rights Agreement, see the Registration Rights Agreement, which is attached as Exhibit 4.5 to our 2025 Annual Report on Form 10-K. Indemnification Agreements We have entered into indemnification agreements with each of our directors and applicable officers, subject to the mandatory limitations imposed by the specific indemnification provisions contained in the Israel Companies Law. These indemnification agreements require us, among other things (and subject to the Israel Companies Law), to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers. The limitation of liability and indemnification provisions may discourage Pagaya shareholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other Pagaya shareholders. Further, a Pagaya shareholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification. Insurance We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law. Pre-Approval of Certain Loans and Guarantees On November 10, 2022, the Board approved a framework transaction of loans and guarantees involving certain Pagaya subsidiaries. Under the Israel Companies Law, transactions by the Company with or for the benefit of an entity (i) that is not wholly owned by the Company and (ii) in which the Company has an interest in that entity because it is managed by the Company’s office holders are considered related party transactions, and therefore require approval by the Board, as well as a determination by the Audit and Finance Committee that the transactions are not “extraordinary.” The Board approved the Company entering into such transactions for a period of 12 months so long as they are within the ordinary course of business and remain under certain individual and aggregate monetary thresholds. Covered transactions include loans to the Company’s subsidiaries (including entities affiliated with Pagaya investment funds), as well as a recourse guaranty or pledge of assets to a third party for the benefit of a subsidiary. The initial Board approval on November 10, 2022 has been renewed for successive years and was last approved by the Pagaya Board and the Audit and Finance Committee for an additional twelve months in November 2025. 31
Director Independence Our Board of Directors has determined that each of Avi Zeevi, Alison Davis, Harvey Golub, Asheet Mehta, and Dan Petrozzo is an independent director under applicable SEC and Nasdaq rules. Mr. Krubiner, Mr. Pardo, Mr. Yulzari, and Ms. Rosen are not independent directors as they are directly employed by the Company. Our Board of Directors has further determined that (i) each director who serves on the Audit and Finance Committee satisfies the additional independence requirements applicable to audit committee members under applicable SEC rules and Nasdaq listing standards and (ii) each director who serves on the Compensation Committee satisfies the additional independence requirements applicable to compensation committees under applicable SEC rules and Nasdaq listing standards. 32
Item 14. Principal Accountant Fees and Services. Principal Accounting Firm Fees Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, served as our independent registered public accounting firm for the fiscal year ended December 31, 2025. The following table sets forth, for each of the years indicated, the fees billed by our independent registered public accounting firm. December 31, 2025 December 31, 2024 Audit Fees $ 2,190,000 $ 1,402,000 Audit-Related Fees 23,000 220,000 Tax Fees 243,000 227,000 All Other Fees — — Total $ 2,456,000 $ 1,849,000 Audit Fees consisted of aggregate fees for professional services provided in connection with the annual audit of our consolidated financial statements, the review of our quarterly condensed consolidated financial statements, consultations on accounting matters directly related to the audit, and comfort letters, consents and assistance with and review of documents filed with the SEC. Audit-Related Fees consisted of professional services that are reasonably related to the performance of the audit or review of our financial statements, and certain other assurance services required by statute or regulation. Tax Fees consisted of aggregate fees for tax compliance, tax advice and tax planning services including the review and preparation of our federal and state income tax returns. All Other Fees were not incurred in 2025 or 2024. Audit and Finance Committee Pre-Approval Policies and Procedures Pursuant to the Audit and Finance Committee Charter and the requirements of law, the Audit and Finance Committee pre-approves all audit and permitted non-audit services that may be provided by Kost Forer Gabbay & Kasierer and its affiliates, our independent registered public accounting firm. This pre-approval applies to audit services, audit-related services, tax services and other services and is designed to ensure that such engagements do not impair the independence of our independent registered public accounting firm. 33
Part IV Item 15. Exhibits and Financial Statement Schedules. (c) Exhibits Exhibit Number Description 3.1 Articles of Association of Pagaya Technologies Ltd., as amended and restated on December 11, 2024 (incorporated by reference to Exhibit 3.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on December 12, 2024) 4.1 Specimen Ordinary Share Certificate of Pagaya Technologies Ltd. (incorporated by reference to Exhibit 4.5 of Pagaya Technologies Ltd. Amendment No. 1 to Registration Statement on Form F-4 filed with the SEC on May 9, 2022) 4.2 Specimen Warrant Certificate of Pagaya Technologies Ltd. (incorporated by reference to Exhibit 4.6 of Pagaya Technologies Ltd. Amendment No. 1 to Registration Statement on Form F-4 filed with the SEC on May 9, 2022) 4.3 Warrant Agreement, by and among, dated as of February 24, 2021, between Continental Stock Transfer & Trust Company and EJF Acquisition Corp. (incorporated by reference to Exhibit 4.1 of EJF Acquisition Corp. Current Report on Form 8-K filed with the SEC on February 24, 2021) 4.4 Assignment, Assumption and Amendment Agreement, by and among Pagaya Technologies Ltd., EJF Acquisition Corp. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.7 of Pagaya Technologies Ltd. Amendment No. 2 to Registration Statement on Form F-4 filed with the SEC on May 18, 2022) 4.5 Form of Registration Rights Agreement (incorporated by reference to Exhibit 4.9 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 4.6 Form of Registration Rights Agreement, dated as of January 5, 2023, by and among Pagaya Technologies Ltd. and the Shareholders of Darwin Homes, Inc. (incorporated by reference to Exhibit 4.16 of Pagaya Technologies Ltd. Annual Report on Form 20-F filed with the SEC on April 20, 2023). 4.7 Registration Rights Agreement by and between the Registrant and B. Riley Principal Capital II, LLC, dated August 17, 2022 (incorporated by reference to Exhibit 10.2 to Current Report on Form 6-K filed on August 17, 2022). 4.8 Voting Agreement, dated as of April 14, 2023, by among Pagaya Technologies Ltd. and Gal Krubiner, Yahav Yulzari and Avital Pardo with regard to the Preferred Shares Purchase Agreement. (incorporated by reference to Exhibit 4.18 of Pagaya Technologies Ltd. Annual Report on Form 20-F filed with the SEC on April 20, 2023). 4.9 Description of Securities (incorporated by reference to Exhibit 4.9 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 4.10 Indenture, dated as of October 1, 2024, by and among the Company, Pagaya US and the Trustee (incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on October 1, 2024) 4.11 Form of Global Note, representing Pagaya US’s 6.125% Exchangeable Senior Notes due 2029 (included as Exhibit A to the Indenture referenced in Exhibit 4.10 hereto, which is incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on October 1, 2024) 4.12 Indenture, dated as of July 28, 2025, by and among the Company, Pagaya US and the Trustee (incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on July 28, 2025) 4.13 Form of Global Note, representing Pagaya US’s 8.875% Senior Notes due 2030 (included as Exhibit A to the Indenture referenced in Exhibit 4.12 hereto, which is incorporated by reference to Exhibit 4.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on July 28, 2025) 10.1 Agreement and Plan of Merger, dated as of September 15, 2021, by and among Pagaya Technologies Ltd., EJF Acquisition Corp. and Rigel Merger Sub Inc. (incorporated by reference to Exhibit 2.1 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 10.2 Form of Subscription Agreement (incorporated by reference to Exhibit 10.8 of Pagaya’s Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 10.3 Credit Agreement, dated as of December 23, 2021, by and among Pagaya Technologies Ltd., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.15 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 34
10.4 Amendment No. 1 to Credit Agreement, dated as of March 15, 2022, by and among Pagaya Technologies Ltd., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.16 of Pagaya Technologies Ltd. Registration Statement on Form F-4 filed with the SEC on April 7, 2022) 10.5† Pagaya Technologies Ltd. Compensation Policy for Executive Officers and Directors (incorporated by reference to Exhibit 10.17 of Pagaya Technologies Ltd. Amendment No. 2 to Registration Statement on Form F-4 filed with the SEC on May 18, 2022) 10.6† Pagaya Technologies Ltd. 2023 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 6-K filed with the SEC on September 13, 2023) 10.7 Credit Agreement, dated as of February 2, 2024, by and among Pagaya Technologies Ltd. and Pagaya US Holding Company LLC, as the borrowers, the several lenders party thereto and Acquiom Agency Services LLC, as administrative agent (incorporated by reference to Exhibit 99.2 to Current Report on Form 6-K filed with the SEC on February 7, 2024). 10.8† Pagaya Technologies Ltd. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.9† Pagaya Technologies Ltd. 2016 Equity Incentive Plan Stock Option Sub-Plan for United States Persons (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.10† Pagaya Technologies Ltd. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.11† Pagaya Technologies Ltd. 2021 Equity Incentive Plan Stock Option Sub-Plan for United States Persons (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022) 10.12† Pagaya Technologies Ltd. 2022 Share Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-8 (File No. 333-265739), filed with the SEC on June 21, 2022) 10.13† Pagaya Technologies Ltd. 2022 Share Incentive Plan Sub-Plan for Israeli Participants (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form F-4 (File No. 333-264168), as amended, filed with the SEC on April 7, 2022). 10.14†* Form of Restricted Stock Unit Award Agreement under the Pagaya Technologies Ltd. 2022 Share Incentive Plan 10.15†* Form of Restricted Stock Unit Award Agreement under the Pagaya Technologies Ltd. 2022 Share Incentive Plan and Sub-Plan for Israeli Participants 10.16† Form of Pagaya Technologies Ltd. Indemnification, Insurance and Exculpation Undertaking (incorporated by reference to Exhibit 10.14 of Pagaya Technologies Ltd. Amendment No. 2 to Registration Statement on Form F-4 filed with the SEC on May 18, 2022) 10.17† Preferred Shares Purchase Agreement, dated as of April 14, 2023, by and among Pagaya Technologies Ltd. and Oak HC/FT Partners V, L.P., Oak HC/FT Partners V-A, L.P. and Oak HC/FT Partners V-B, L.P. (incorporated by referenced to Exhibit 4.17 of Annual Report on Form 20-F filed with the SEC on April 20, 2023). 10.18† General Release and Settlement Agreement between Amol Naik and Pagaya Technologies US LLC (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on August 9, 2024) 10.19† Employment Agreement between Gal Krubiner and Pagaya Technologies US LLC. (incorporated by reference to Exhibit 10.2 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024) 10.2† Employment Agreement between Yahav Yulzari and Pagaya Technologies Ltd. (incorporated by reference to Exhibit 10.3 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024) 10.21† Employment Agreement between Avital Pardo and Pagaya Technologies Ltd. (incorporated by reference to Exhibit 10.21 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 10.22† Employment Agreement between Sanjiv Das and Pagaya Technologies US LLC. (incorporated by reference to Exhibit 10.22 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 10.23† Employment Agreement between Evangelos Perros and Pagaya Technologies US LLC. (incorporated by reference to Exhibit 10.23 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 35
10.24 Underwriting Agreement, dated March 13, 2024, between Pagaya Technologies Ltd. and Citigroup Global Markets Inc. and Jefferies LLC, as representatives of the several underwriters (incorporated by referenced to Exhibit 1.1 of Form 6-K filed with the SEC on March 18, 2024) 10.25 Amendment No. 1 to the Credit Agreement, dated as of September 26, 2024, among the Company as a borrower, Pagaya US as a borrower, the Lenders and Acquiom, as administrative agent (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Current Report on Form 8-K filed with the SEC on October 1, 2024) 10.26 Amendment No. 2 to Credit Agreement, dated as of November 5, 2024, among the Company as a borrower, Pagaya US as a borrower, the Lenders and Acquiom, as administrative agent (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 12, 2024) 10.27 Amendment No. 3 to Credit Agreement, dated as of July 28, 2025, among the Company as a borrower, Pagaya US as a borrower, the Lenders and Acquiom, as administrative agent (incorporated by reference to Exhibit 10.1 of Pagaya Technologies Ltd. Quarterly Report on Form 8-K filed with the SEC on July 28, 2025) 10.28 Credit Agreement, dated as of October 1, 2025, by and among Pagaya Technologies Ltd. and Pagaya US Holding Company LLC, as the borrowers, the several lenders party thereto and BMO Bank N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on October 2, 2025) 10.29† Amendment No. 1 to the Employment Agreement between Sanjiv Das and Pagaya Technologies US LLC (incorporated by reference to Exhibit 10.3 of Pagaya Technologies Ltd. Quarterly Report on Form 10-Q filed with the SEC on November 10, 2025) 19.1 Pagaya Technologies Ltd. Insider Trading Policy (incorporated by reference to Exhibit 19.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 21.1 List of Subsidiaries of Pagaya Technologies Ltd. (incorporated by reference to Exhibit 21.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 23.1 Consent of Kost Forer Gabbay & Kasierer, a member firm of EY Global, independent registered accounting firm for Pagaya Technologies Ltd. (incorporated by reference to Exhibit 23.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 24.1 Power of Attorney (included on the signature page of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 31.1 Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 31.2 Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.2 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 31.3* Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 31.4* Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002 32.1 Certificate of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 32.2 Certificate of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.2 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 2, 2026) 97.1 Incentive Compensation Recoupment Policy, approved by the Board on November 29, 2023 (incorporated by reference to Exhibit 97.1 of Pagaya Technologies Ltd. Annual Report on Form 10-K filed with the SEC on March 12, 2025) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith † Indicates a management contract or compensatory plan. 36
SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 10-K and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf. PAGAYA TECHNOLOGIES LTD. Date: April 30, 2026 By: /s/ Gal Krubiner Name: Gal Krubiner Title: Chief Executive Officer Date: April 30, 2026 By: /s/ Evangelos Perros Name: Evangelos Perros Title: Chief Financial Officer 37
Gal Krubiner, Chief Executive Oicer, Pagaya Avital Pardo, Deputy Chief Executive Oicer, Pagaya Yahav Yulzari, Deputy Chief Executive Oicer, Pagaya Avi Zeevi, Co-Founder, Viola Group Alison Davis, Chairperson and Managing Director, Fifth Era and Blockchain Coinvestors Harvey Golub, Board Chair, Dynasty Financial Partners and Marblegate Capital Corporation Asheet Mehta, Founder and Chief Executive Oicer, Resfi.ai Dan Petrozzo, Former Partner and Venture Partner, Oak HC/FT Tami Rosen, Chief Development Oicer, Pagaya Board of Directors Gal Krubiner, Chief Executive Oicer Avital Pardo, Deputy Chief Executive Oicer Yahav Yulzari, Deputy Chief Executive Oicer Sanjiv Das, President Jonathan Dobres, Chief Financial Oicer Executive Oicers