Pagaya Technologies (PGY) 6-K Pagaya Reports Third Quarter 2022 Results

Exhibit 99.2

PAGAYA TECHNOLOGIES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(In thousands)

	September 30,			December 31,
	2022			2021
Assets	(Unaudited)			(Audited)
Current assets:
Cash and cash equivalents	$	327,896		$	190,778
Restricted cash		34,161			7,000
Short-term deposits		—			5,020
Fees and other receivables (including related party receivables of $43,340 and $32,332 as of September 30, 2022 and December 31, 2021, respectively)		52,122			32,332
Investments in loans and securities		2,446			5,142
Prepaid expenses and other current assets (including related party assets of $15,500 and $1,367 as of September 30, 2022 and December 31, 2021, respectively)		22,512			6,263
Total current assets		439,137			246,535
Restricted cash		4,762			6,797
Fees and other receivables (including related party receivables of $30,701 and $19,208 as of September 30, 2022 and December 31, 2021, respectively)		31,250			19,208
Investments in loans and securities		442,840			277,582
Equity method and other investments		25,807			14,841
Right-of-use asset		66,366			—
Property and equipment, net		28,202			7,648
Deferred tax assets, net		8,501			5,681
Deferred offering costs		—			11,966
Prepaid expenses and other assets		2,706			—
Total non-current assets		610,434			343,723
Total Assets	$	1,049,571		$	590,258
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,483		$	11,580
Accrued expenses and other liabilities (including related party liabilities of $537 and $2,510 as of September 30, 2022 and December 31, 2021, respectively)		40,343			17,093
Operating lease liability - current		8,983			—
Secured borrowing - current		26,251			—
Income taxes payable - current		10,924			—
Total current liabilities		88,984			28,673
Non-current liabilities:
Warrant liability		3,080			27,469
Secured borrowing - non-current		87,503			37,905
Operating lease liability - non-current		53,501			—
Income taxes payable - non-current		22,773			11,812
Total non-current liabilities		166,857			77,186
Total liabilities		255,841			105,859
Redeemable convertible preferred shares					307,047
Shareholders’ equity:
Ordinary shares		—			—
Additional paid-in capital		947,381			113,170
Accumulated deficit		(380,201	)		(111,878	)
Total Pagaya Technologies Ltd. Shareholders’ Equity		567,180			1,292
Noncontrolling interests		226,550			176,060
Total shareholders’ Equity		793,730			177,352
Total Liabilities and Shareholders’ Equity	$	1,049,571		$	590,258

PAGAYA TECHNOLOGIES LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME (LOSS)

FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
​	2022			2021			2022			2021
Revenue	​			​
Revenue from fees (including related party revenues of $171,300 and $128,149 for the three months ended September 30, 2022 and 2021, respectively, and $492,300 and $301,604 for the nine months ended September 30, 2022 and 2021, respectively)	$	185,614		$	128,149		$	507,241		$	301,604
Other Income
Interest income		13,666			8,455			43,127			18,256
Investment income (loss)(1)		4,675			(14	)		5,670			(2	)
Total Revenue and Other Income		203,955			136,590			556,038			319,858
Costs and Operating Expenses
Production costs		129,115			81,731			326,375			181,505
Research and development		38,643			11,932			127,379			51,344
Sales and marketing		26,579			9,161			90,229			37,564
General and administrative		73,790			18,961			236,863			53,068
Total Costs and Operating Expenses		268,127			121,785			780,846			323,481
Operating Income (Loss)		(64,172	)		14,805			(224,808	)		(3,623	)
Other income (loss), net(2)		3,233			(32,768	)		9,846			(51,539	)
Income (Loss) Before Income Taxes		(60,939	)		(17,963	)		(214,962	)		(55,162	)
Income tax expense(2)		6,065			3,624			25,604			11,417
Net Loss		(67,004	)		(21,587	)		(240,566	)		(66,579	)
Less: Net income attributable to noncontrolling interests		7,785			6,570			27,757			14,116
Net Loss Attributable to Pagaya Technologies Ltd.	$	(74,789	)	$	(28,157	)	$	(268,323	)	$	(80,695	)
Per share data:
Net loss attributable to Pagaya Technologies Ltd.	$	(74,789	)	$	(28,157	)	$	(268,323	)	$	(80,695	)
Less: Undistributed earnings allocated to participated securities		—			(3,153	)		(12,205	)		(13,494	)
Less: Deemed dividend distribution		—			—			—			(23,612	)
Net loss attributed to Pagaya Technologies Ltd.	$	(74,789	)	$	(31,310	)	$	(280,528	)	$	(117,801	)
Net loss per share attributable to Pagaya Technologies Ltd.:
Basic and Diluted(3)	$	(0.11	)	$	(0.16	)	$	(0.73	)	$	(0.61	)
Weighted average shares outstanding:
Basic and Diluted(3)		679,431,901			196,023,981			381,831,895			194,490,947

(1) Includes income from proprietary investments.

(2) Amounts for the nine months ended September 30, 2022 include certain adjustments for the second quarter of 2022 relating to deferred tax assets and warrant liability, which were not originally recorded as of and for the three and six months ended June 30, 2022.

(3) Prior period amounts have been retroactively adjusted to reflect the 1:186.9 stock split effected on June 22, 2022.

PAGAYA TECHNOLOGIES LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands, except share amounts)

	Redeemable Convertible Preferred Shares				Ordinary Shares
​	Shares(1)		Amount		Shares(1)		Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Total Pagaya Technologies Ltd. Shareholders’ Equity (Deficit)			Non-Controlling Interests			Total Shareholders’ Equity
Balance – June 30, 2021		402,666,012	$	278,626		191,056,558	$	—	$	103,930	$	(73,265	)	$	30,665		$	142,911		$	173,576
Issuance of Preferred D shares upon exercise of warrants		1,000,616		6,009											—						—
Issuance of ordinary shares upon exercise of share options						2,857,595				92					92						92
Share-based compensation										3,857					3,857						3,857
Contributions of interests in consolidated VIEs															—			46,182			46,182
Return of capital to interests in consolidated VIEs															—			(21,089	)		(21,089	)
Net income (loss)												(28,157	)		(28,157	)		6,570			(21,587	)
Balance – September 30, 2021		403,666,628	$	284,635		193,914,153	$	—	$	107,879	$	(101,422	)	$	6,457		$	174,574		$	181,031

	Redeemable Convertible Preferred Shares				Ordinary Shares
​	Shares(1)		Amount		Shares(1)		Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Total Pagaya Technologies Ltd. Shareholders’ Equity (Deficit)			Non-Controlling Interests			Total Shareholders’ Equity
Balance – December 31, 2020		321,805,961	$	105,981		190,397,142	$	—	$	315	$	2,885		$	3,200		$	84,945		$	88,145
Issuance of Series D convertible preferred shares, net of issuance costs of $11		45,853,065		36,639											—						—
Issuance of Series E convertible preferred shares, net of issuance costs of $158		35,006,986		136,006											—						—
Issuance of Preferred D shares upon exercise of warrants		1,000,616		6,009											—						—
Issuance of ordinary shares upon exercise of share options						3,517,011				171					171						171
Share-based compensation										62,974					62,974						62,974
Deemed contribution										23,612					23,612						23,612
Deemed dividend distribution												(23,612	)		(23,612	)					(23,612	)
Issuance of ordinary share warrants										20,807					20,807						20,807
Contributions of interests in consolidated VIEs															—			129,970			129,970
Return of capital to interests in consolidated VIEs															—			(54,457	)		(54,457	)
Net income (loss)												(80,695	)		(80,695	)		14,116			(66,579	)
Balance – September 30, 2021		403,666,628	$	284,635		193,914,153	$	—	$	107,879	$	(101,422	)	$	6,457		$	174,574		$	181,031

	Redeemable Convertible Preferred Shares				Ordinary Shares
​	Shares		Amount		Shares(1)		Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)(2)			Total Pagaya Technologies Ltd. Shareholders’ Equity (Deficit)			Non-Controlling Interests			Total Shareholders’ Equity
Balance – June 30, 2022		—	$	—		653,914,376	$	—	$	878,255	$	(305,412	)	$	572,843		$	172,193		$	745,036
Issuance of ordinary shares upon exercise of warrants						21,170,017									—						—
Issuance of ordinary shares upon exercise of share options						5,573,732				1,034					1,034						1,034
Issuance of ordinary shares upon vesting of RSUs						91,655									—						—
Issuance of ordinary shares related to commitment shares						46,536				1,000					1,000						1,000
Share-based compensation										67,092					67,092						67,092
Contributions of interests in consolidated VIEs															—			63,466			63,466
Return of capital to interests in consolidated VIEs															—			(16,894	)		(16,894	)
Net income (loss)												(74,789	)		(74,789	)		7,785			(67,004	)
Balance – September 30, 2022		—	$	—		680,796,316	$	—	$	947,381	$	(380,201	)	$	567,180		$	226,550		$	793,730

	Redeemable Convertible Preferred Shares						Ordinary Shares
​	Shares(1)			Amount			Shares(1)		Amount	Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Total Pagaya Technologies Ltd. Shareholders’ Equity (Deficit)			Non-Controlling Interests			Total Shareholders’ Equity
Balance – December 31, 2021		406,399,029		$	307,047			194,345,792		$	113,170	$	(111,878	)	$	1,292		$	176,060		$	177,352
Issuance of ordinary shares upon exercise of warrants								21,170,017								—						—
Issuance of ordinary shares upon exercise of share options								15,606,239			1,480					1,480						1,480
Issuance of ordinary shares upon vesting of RSUs								96,326								—						—
Issuance of ordinary shares related to commitment shares								46,536			1,000					1,000						1,000
Issuance of ordinary shares in connection with the Business Combination and PIPE Investment, net of issuance costs of $57,400		(406,399,029	)		(307,047	)		449,531,406			581,359					581,359						581,359
Share-based compensation											229,797					229,797						229,797
Reclassification of warrants											20,575					20,575						20,575
Contributions of interests in consolidated VIEs																—			92,988			92,988
Return of capital to interests in consolidated VIEs																—			(70,255	)		(70,255	)
Net income (loss)													(268,323	)		(268,323	)		27,757			(240,566	)
Balance – September 30, 2022		—		$	—			680,796,316	$          —	$	947,381	$	(380,201	)	$	567,180		$	226,550		$	793,730

(1) Prior period amounts have been retroactively adjusted to reflect the 1:186.9 stock split effected on June 22, 2022.

(2) Amount as of June 30, 2022 includes certain adjustments for the second quarter of 2022 relating to deferred tax assets and warrant liability, which were not originally recorded as of and for the three and six months ended June 30, 2022.

PAGAYA TECHNOLOGIES LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands)

	Nine Months Ended September 30,
​	2022			2021
Cash flows from operating activities	​
Net loss	$	(240,566	)	$	(66,579	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity method income (loss)		(5,670	)		2
Depreciation and amortization		4,077			489
Share-based compensation		223,007			62,974
Fair value adjustment to warrant liability		(9,408	)		51,477
Issuance of ordinary shares related to commitment shares		1,000			—
Loss from investment in loans and securities		10,706			—
Change in operating assets and liabilities:
Fees and other receivables		(31,832	)		(16,929	)
Deferred tax assets, net		(2,820	)		(2,979	)
Prepaid expenses and other assets		(18,530	)		(17,221	)
Right-of-use asset		2,322			—
Accounts payable		(9,097	)		4,242
Accrued expenses and other liabilities		23,250			8,265
Operating lease liability		(6,204	)		—
Income tax payable		21,885			14,059
Net cash (used in) provided by operating activities		(37,880	)		37,800
Cash flows from investing activities
Proceeds from the sale/maturity/prepayment of:
Investments in loans and securities		88,538			27,935
Short-term deposits		5,020			—
Equity method and other investments		453			925
Payments for the purchase of:
Investments in loans and securities		(261,806	)		(142,146	)
Property and equipment		(18,266	)		(1,517	)
Equity method and other investments		(5,749	)		(22,991	)
Short-term deposits		—			(51,446	)
Net cash used in investing activities		(191,810	)		(189,240	)
Cash flows from financing activities
Proceeds from sale of ordinary shares in connection with the Business Combination and PIPE Investment, net of issuance costs		291,872			—
Proceeds from issuance of redeemable convertible preferred shares, net		—			172,645
Proceeds from issuance of ordinary share warrants, net		—			20,807
Proceeds from secured borrowing		94,094			—
Proceeds received from noncontrolling interests		92,988			129,970
Proceeds from revolving credit facility		26,000			—
Proceeds from exercise of stock options		1,480			171
Distribution made to noncontrolling interests		(70,255	)		(54,457	)
Distribution made to revolving credit facility		(26,000	)		—
Distribution made to secured borrowing		(18,245	)		—
Payment for deferred offering costs		—			(4,278	)
Net cash provided by financing activities		391,934			264,858
Net increase in cash, cash equivalents and restricted cash		162,244			113,418
Cash, cash equivalents and restricted cash, beginning of period		204,575			5,880
Cash, cash equivalents and restricted cash, end of period	$	366,819		$	119,298
Reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated statements of financial position to the amounts shown in the statements of cash flow above:
Cash and cash equivalents	$	327,896		$	101,236
Restricted cash - current		34,161			12,000
Restricted cash - non-current		4,762			6,062
Total cash, cash equivalents, and restricted cash	$	366,819		$	119,298