Good day, welcome to the Pagaya first quarter 2023 earnings call. Today's call is being recorded. At this time, I would like to turn the call over to Jency John, Head of Investor Relations. Please go ahead. Thank you and welcome to Pagaya's first quarter 2023 earnings conference call. Joining me today to talk about our business and results are Gal Krubiner, Chief Executive Officer of Pagaya, and Michael Kurlander, Chief Financial Officer. You can find the presentation that accompanies our prepared remarks, our earnings release, and a replay of today's webcast on the investor relations section of our website at investor.pagaya.com. Our remarks today will include forward-looking statements that are based on our current expectations and forecasts and involve risks and uncertainties. These statements include, but are not limited to, o ur competitive advantages and strategy, macroeconomic conditions and outlook, future products and services, and future business and financial performance. Our actual results may differ from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are described in today's press release and in our Form 20-F, filed on April 20th, 2023, as furnished with the U.S. Securities and Exchange Commission, as well as our subsequent filings made with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Additionally, non-GAAP financial measures will be discussed on the call. Reconciliation to the most directly comparable GAAP financial measures are available in the earnings release and in the appendix to the earnings presentation, which are posted on our investor relations website. With that, let me turn the call over to Gal. Thank you, Jency. This quarter was another proof point of our ability to execute through volatility and progress on our long-term strategy. I will start with a performance update, then an overview of our plan to achieve our medium-term growth ambition, before I pass it over to Mike to discuss this quarter's financial and outlook for the remainder of the year. Let me take you through the financial highlights for the quarter. We beat guidance on all of our key metrics this quarter: network volume, revenue, and adjusted EBITDA. We return to profitability on adjusted EBITDA basis ahead of our outlook, and are increasing our adjusted EBITDA guidance for the full year, reflecting our focus on driving sustainable, profitable growth. Network volume in the quarter was $1.85 billion, 12% higher than last year. This drove total revenue and other income of $187 million, 9% higher than last year, and adjusted EBITDA of $2 million. As a reminder, we closed our acquisition of Darwin in January, an investment we made to take our SFR platform to the next level. If we exclude the impact of Darwin, adjusted EBITDA would have been approximately $5 million, a like-for-like improvement of $14 million sequentially versus the fourth quarter of 2022. Now I will discuss operational highlights that drove these results. On the partner side, 20% of our network volume came from our partners and products that were onboarded in 2022. As our Network grows, we see increased monetization opportunities, with AI integration fees growing by 230 basis points from 5.5% to 7.8% of network vo lume. On the funding side, we were the top issuer of personal loan ABS in the U.S. in Q1, continuing that ranking from 2022 with over 30% share of market. We onboarded two major asset managers to our network and strengthened our relationship with some of our long-term funding investors such as GIC. Our funding capabilities remain robust as our AI technology enable us to outperform the market. With these achievements in mind, we are confident we are well-positioned for future growth. We remain focused on what we can control, although the timing and pace of our growth can be somewhat influenced by market conditions. Stepping back for a second, we want to talk about Pagaya's mission. Pagaya's mission is to empower our partners to deliver more financial opportunities to more people, more often. We do this by leveraging AI technology and data science. We partner with financial institutions like Ally, SoFi and Klarna who originate loans with our network. Institutional investors purchase these loans through our network too. Over 1 million U.S. consumers currently have active loans that were originated with the Pagaya technology. We have a unique business model that we believe is inherently less volatile than other comparable fintechs in consumer lending space. On slide 13 of our earnings presentations, we compared Pagaya's volume and revenue versus a market benchmark, which shows that we have been able to deliver more consistent and stable performance over time. Looking ahead, our medium-term financial ambition is to reach $25 billion in network volume and $1 billion in Fee Revenue less Production Costs or FRLPC. We plan to do this by, one bringing more value to existing partners. Two adding new partners, including large banks. Finally, by driving a 3%-4% FRLPC margin. This brings us to what I believe is an inflection point in our company's journey. We already have the tools we need to reach our medium-term ambition. We have become meaningful contributors to the growth of some of our most mature partners. Looking at our top three personal loan partners, approximately 26% of their total origination volume are being created using our network. That compares to only 10% of their origination volumes in the first quarter of 2021. As our value grows, we see improving economics. AI integration fees, which are fees earned for the creation of assets on our network, are growing, helping to offset the impact of financial markets volatility. New partners and products, such as auto, are also growing rapidly. Application volume for our auto business grew by 51% year-over-year, supported by increasing application flow of the large bank we onboarded in 2022. We grew network volume for that partner by four times since its first quarter on our network, with significant runway to scale further in the near future. The combination of increasing scale of mature partners and the addition of new partners and products has resulted in substantial growth over the past few years. The 2022 network volume was nearly 5x larger than network volume in 2020. We have significant runway for future growth with our network as it stands today. We show an illustration of this on slide 21 and 22. We believe we can reach our medium-term ambition of $25 billion of network volume and $1 billion of FRLPC with just the existing partners and products on our network. Let me dive into this a bit further. In 2022, we onboarded six new partners with an estimated combined annual origination volume of over $65 billion. We have already demonstrated that for some of our mature partners, we can drive growth equivalent to nearly 30% of the partner's total originations. If we assume that we eventually reach 30% of 2022 origination volume for just the six partners we onboarded last year, this is an additional $20 billion of network volume on top of the $7 billion we already delivered in 2022. Gives us a total of around $27 billion dollar in annual network volume. That assumes zero growth from other partners on our network and zero new partners. While we will of course, continue to drive growth from existing partners and adding new ones, we have the ability to reach our financial goals even without doing so. If we apply our target FRLPC margin of 3%-4% to the $27 billion of network volume, that translates to nearly $1 billion of FRLPC. Let me discuss our focus on growing and diversifying our funding network. We offer institutional investors one-stop-shop access to five different markets at scale with outperformance enabled by AI. We have raised over $16 billion in funding across all of our financial vehicles since 2020, and we have been able to do so consistently, even in severe market dislocations. Our ABS, these are typically oversubscribed by 2 times to 3 times, enabling us to become the top personal loan ABS issuer in the U.S., reaching this rank in just four years. As our auto business grows, we are increasing issuance to fund new partners' origination. We issued $1.1 billion in 2022, ramping up to nearly $800 billion in May 2023 year-to-date. Our investor base is growing. Our order book for our ABS vehicles has around 80 unique investors and is becoming more diversified over time with a mix of large asset managers, sovereign wealth funds, hedge funds, and insurance companies. We have seen a significant step-up over time in repeat investment from existing investors, as you can see on slide 30, speaking to the strengths of our performance track record. As we announced last month, we extended our funding relationship with GIC through 2028. We also welcomed new top-tier institutional investors to our funding network. As we announced yesterday, we are partnering with Angelo Gordon, Värde Partners, and Atlas to provide funding for a multi-billion dollar credit union. We believe that growing investor demand is a reflection of our ability to consistently deliver asset outperformance with AI technology. While application volume from partners tend to grow over time as our network expands, our conversion rate is our level to optimize as a performance as macro conditions evolve. Backed by AI-driven insights, we have been exercising underwriting prudence in the current environment, reducing our approval rate by nearly 50%, as you can see on slide 32. As liquidity conditions will improve, we can dial the rate back up and increase network volume. In fact, if we applied our peak third quarter in 2021 conversion rate to full year 2022 application volume, network volume in 2022 would have been over $10 billion, doubled what it was in 2021. With a faster reaction time enabled by our AI, our personal loan portfolio has consistently outperformed the market benchmark 30 days past due at months on book three for Q4 2022 vintages are 55% lower than Q4 2021 vintages, which were some of the worst-performing vintages market-wide. With recent vintages returning to Q1 2021 performance levels, we're comfortable with our target ROA range of 8%-12% return. Before I turn things over to Mike, let me recap. I believe that our business is at inflection point. First, our network is expanding with significant runway ahead of us. As the network expands, our AI technology gets stronger with more training data points and increased model accuracy. As our data mode grows, we have an increasing ability to monetize our network. Increasing scale and monetization combined with a focus of operational efficiency give us an achievable path forward to delivering sustainable, profitable growth. Let me pass it over to Mike to discuss this, as well as our 2023 outlook in more detail. Thanks, Gal. The inflection point Gal just spoke to is also starting to be reflected in our financial performance. We believe that the path forward to delivering sustainable profitability will primarily be a function of three factors. Number one, significant runway for future growth, which Gal spoke to. Number two, a resilient business model that enables consistent delivery of our targeted 3%-4% FRLPC margin. Number three, a continued focus on operating efficiency. As a reminder, in 2022, we made significant discretionary investments resulting in near breakeven adjusted EBITDA of -$5 million. In the first quarter of 2023, we returned to positive adjusted EBITDA, excluding the impact of Darwin of $14 million sequential improvement versus Q4 2022. Our Q1 2023 results reflected a focus on higher margin generating volumes, further monetizing our network, and executing on cost savings initiatives, while also optimizing for asset returns as market conditions remain volatile. Network volume grew by 12% year-over-year to $1.85 billion, primarily from the acceleration of new partnerships, balanced by a continued low conversion rate of application volume. Total revenue and other income grew 9% to $187 million. Revenue from fees, which makes up 95% of total revenues, grew by 11% year-over-year. Our take rate, defined as revenue from fees as a percentage of network volume, remained stable versus the prior year at 9.5%. This reflects an evolving composition of our fee revenue, as you can see on slides 40 and 41. While capital markets fees are lower in the current macro environment, we've increased AI integration fees and contract fees. We believe our ability to effectively hedge the impact of financial markets with multiple revenue streams speaks to the resiliency of our business model and the future potential to monetize the network as we grow. After factoring in production costs, our FRLPC margin declined to 2.7% in Q1. While this is below our target of 3%-4% of network volume, we view this as a transitory period where capital markets fees are pressured by current market conditions and AI integration fees are on the rise. We expect our FRLPC margin to increase above 3% in the second quarter and on a full year basis in 2023, as we realize the full quarter's impact of improving economics. Turning to operating expenses. Last quarter, we spoke about cost savings initiatives that we planned to implement in 2023 to deliver gross annualized savings of $50 million. We accelerated the bulk of those initiatives in Q1. Operating expenses, less stock-based compensation, depreciation, and one-time expenses in the first quarter, declined $10 million sequentially versus the fourth quarter of 2022, excluding the impact of our recent Darwin acquisition. Our operating expense ratio declined by 3 percentage points sequentially versus Q4 2022 to 29% of total revenue. GAAP net loss was $61 million, impacted by non-cash items such as share-based compensation and our election to a shift to available-for-sale accounting for our risk retention assets. GAAP net loss in the quarter reflected the cumulative impact of this shift. Adjusted net loss in the quarter was $11 million, excluding these items. In summary, let me reiterate that we remain committed to delivering sustainable profitability on an adjusted EBITDA basis. With another quarter of strong execution behind us, we are entering Q2 with significant momentum. As a result, we are raising our adjusted EBITDA guidance to now range between $15 million and $30 million on the year. Our outlook for second quarter and fiscal year 2023 reflects a few factors. First, continued prudence in underwriting standards as the environment remains uncertain. Second, delivering our target 3%-4% FRLPC margin. Third, a continued focus on cost management. It's important to note, with limited visibility, we are not factoring in any material improvements in capital markets into our outlook. In the second quarter, we expect network volume to range between $1.8 billion and $1.9 billion. Total revenue and other income to range between $180 million and $190 million, and adjusted EBITDA to range between $5 billion and $10 billion. For the full year 2023, we expect network volume to range between $7.5 billion and $8 billion, total revenue and other income to range between $775 million and $825 million, and adjusted EBITDA to range between $15 million and $30 million. With that, let me turn it back to the operator for Q&A. Excuse me. We will now be conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the questioning queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the keys. One moment please while we pull for questions. Our first question comes from Joseph Vafi with Canaccord. Hey, guys. Good morning. Thanks for taking the questions. Nice to see the progress in the business and nice to see the fine tune up on the EBITDA line. Just, you know, at a high level, maybe some of the top of the funnel metrics we could dive into. I know you disclosed a really nice increase in application volume in auto. Just wondering, you know, what you're seeing in some of the other verticals and, you know, related to that, appetite from new lenders becoming partners. I'll have a follow-up. Sure, Joe. It's Gal here. Thanks for the question. As you pointed out, definitely auto was the application that we grew the most, I think over 50% because of, like, very good partnerships, we landed. That's the part where we're growing the most. Second to that, I would say that we are seeing a strong demand for application from our existing partners continue to grow up, both on the personal loan and some other new partners, as you know, like Klarna and others that just onboarded, and working very diligently to increase the amount of application flow and to ramp up this type of partnership. From new partner perspective, we do expect to have one or two more at the other half of the quarter, hopefully big names, that we've been working a lot on and will show the importance and the progress of the lending partners as such. From the way we think about conversion of these things, obviously it's important to say that we are staying very prudent in this environment, and we are shifting to more resilient borrowers. Conversion rate has taken down 50% from 3Q 2021, and that actually means two things. It means that, like, we have already embedded growth in our systems, lenders, et cetera, that as soon as the environment improve, we can tweak that up and create a lot of growth based on what we have already. The other piece is, in these days, it's bringing us better quality of borrowers that are actually having higher FICO, higher income because of other funding partners are closing their credit box more and more. Maybe the last point to add, just like on the funding side of that, which is another top of the funnel metric, we have raised over two and a half billion dollar yield today to support that growth. Great. Maybe one on conversion rate. I know it's down, as you're remaining prudent and cautious on underwriting. Looks like it's kind of stabilized here for a couple quarters. How should we feel about that conversion rate trajectory? You know, or basically, do you think we're at the bottom of where conversion rate is, or would there be something that would take it lower other than, you know, perhaps another macro leg downturn? Thanks a lot, guys. I think you are on point. We are in the field today that we have bottomed out. Like, we're up to the bottom from a conversion perspective. I will say that these things are coming from where we see the funding cost and where we see the ROA of the assets that we are producing. From an ROA perspective, we believe that we are in the 8%-12%, which is our target, and therefore we don't need to reduce the conversion rate further. I think the next thing you will see in the coming quarter is the conversion will start to go up. It's hard to predict exactly when and how, but definitely the trend, the direction, is for that, and that's, and that's what we believe is the power of the situation we are standing and kind of like the inflection point of Pagaya from that perspective. Thank you. Thanks, Joe. Our next question comes from Michael Legg with Benchmark. Thanks. Just kinda wanna follow up on Joe's question on the verticals. Can you talk a little bit more about the geographic dispersion of where you're seeing, you know, strength, weakness, throughout the different regions a little bit? Thanks. Sure. From regions perspective, it's rather diversified across the U.S. Like the big states such as California, Texas, et cetera, you will assume they are higher percentage, but if you do it by population, it's kind of like more or less the same. Okay, great. Just to follow up, you mentioned AI integration fees going up. Can you talk about how you're able to pass those through? Thanks. Hey, how's it going? Thanks for the question, Michael. It's Mike. Absolutely. We see in these times, the value proposition of Pagaya is, you know, really enabling our partners to continue to grow. As Gal touched on, in this environment, you see credit tightening, you see funding more scarce. In that sort of environment, we're able to help our partners grow using the Pagaya network. As we do that, we've been able to as part of our value proposition, increase fees. So as our partners win, we've been winning alongside, and that's allowed us to grow our integration fees by approximately 230 basis points over last year. Nice. Just following on that, does that mean that you have a host of people who want to use your API and that you're, you know, by increasing the cost, it's almost limiting the expansion in the near term, just based upon availability or your capacity, I should say? Yeah, I think. This is Gal again. I think that, like, if you think about it in economics and environments like that, you are prioritizing places where you have a higher margin or higher fees. as the environment and the macro is becoming more stable, you will move more to grow, even in the lower margin type of products, and you will be less prudent on that side too. I think that you can think about it as, not as, like, a slower of growth in that environment, and that's part of the way it's influencing us. as you saw, we moved to a positive EBITDA being stronger, the fundamentals of the business as such. As these things will move on, we'll continue to grow because we have all the fundamentals to be able to do so. Great. Congratulations on a great quarter. Thanks. Our next question comes from Moshe Orenbusch with Credit Suisse. Thanks. Gal and Mike, great quarter. Maybe following up on that a little bit, you know, I think Pagaya had some unique advantages during that difficult funding environment because you kind of pre-funded, and you were able to sorta, you know, get compensated for that. Could you talk a little bit about how you know, if, you know, the financial markets normalize, you know, how do you kind of protect the advantage, that you were able to get in this environment? Definitely. Moshe, nice to hear you, and thanks a lot for the, for the question. It may be a little bit less intuitive, but like, in times like that, as you mentioned, our value proposition actually is actually becoming more apparent. Let me talk about it both on the partner side, as you mentioned, and on the funding side. For the first side, the partner side, like we are, a real part of the ability to fund it, and we're enjoying doing that. This is our duty. That's why we are here, to support our partners, to be able to bring more credit to our consumers. You see that in few places in the presentation that our wallet share, so to speak, with many of our partners is increasing as the day goes by, and especially in these environments. On the funding side, it's Sorry, for that, like, it obviously creates for us a lower cyclicality volatility versus others because we are becoming a bigger part of that lending ecosystem in these days. Like in normal days, the environment is growing, and we are keeping our fair share. In days like that, the environment may be not growing, but we are increasing our fair share. That is a little bit of the less volatility more consistently, that we are speaking. Historically, we saw that both of these volatile markets, partners really much appreciate the stability. For them, top number one, kind of like metrics, is the stability of the network, and it's strengthening their value proposition, their ability to be there for their consumers, and therefore increasing our value proposition with them. I think that the stability is something that, like, the partners very much appreciated. We are working day in, day out to make sure we are gonna be for that through the times, and as such, getting compensated for that and rewarded. On the funding side, in days like that, investors want to be more prudent. They want a high-quality source of assets that is coming with a very strong underwriting capabilities. I think to that, just yesterday we announced a very unique partnership that we did together with Angelo Gordon and Värde to be able to facilitate some kind of a portion of a portfolio sell- out through a credit union through our technology. Being there next to our funders, next to our funding partners, and to be able to facilitate and to utilize the network AI capabilities in order to make sure the performance is gonna be in line and intact is the thing that we are flipping and making sure we are doing in this environment. As I said about the partners, that goes a long way in becoming a strong relationships that are here to stay after these market situations and are the basic building block for our ability to deliver the future growth in the $27+ billion opportunity that we have. Great. Thanks. Maybe as a follow-up, you know, the idea of being able to charge, you know, AI fees versus capital markets fees, you know, I would imagine it's generally when the capital markets environments were more robust, it was easier for your customers to pay you in those capital markets fees. Could you talk a little bit about how you see that mix evolving over time? Sure. Yeah, Mike, you want to take it? Absolutely. Hey, Moshe. Really, I think a good demonstration of the resiliency of the business model, because there's actually a slide, I think it's 41, in the deck that shows this very vividly is you've got those two different types of fees that you referred to. On the capital markets side, you've seen the trend actually decrease as market liquidity has dried up overall. We actually think that's now really hitting a bottoming out point. On the other side, you've got the AI integration fees, which is, you know, everything Gal just spoke to around the value add from a partner perspective and from overall ability to grow. Those two things will ebb and flow depending on the overall market. Our goal is to deliver consistent results of FRLPC in the 3%-4%. We think we can get there through multiple ways, which is the unique structure of our business model that's resilient. Great. Thanks very much. Our next question comes from Carrington Akosa with SVB MoffettNathanson. Yeah, thank you. Good morning. On Darwin, you disclosed Darwin's contribution to adjusted EBITDA. Could you also disclose Darwin's contributions to revenue and, maybe to volume too? Yeah. Hey, thanks for the question. I'd say maybe stepping back on the question around Darwin overall, I would just start by saying we're really pleased with the progress of the integration. We spoke last quarter about the value of Darwin and a strong leadership team and disruptive technology that's really gonna add to our overall vertical platform in the SFR space. Overall, really excited about the future growth trajectory allowing with Darwin coming into our platform. From an actual results perspective, actually very, you know, very immaterial in terms of overall business, which is in line with our expectations. We did disclose, as you mentioned, on adjusted EBITDA. Without the adjusted EBITDA impact of Darwin, we would've been approximately $5 million. In the order of single-digit, small dollars millions of impact. We don't expect that to be material in the upcoming quarter. Over time, we expect to really generate the synergy and the value of the Darwin platform as it grows. Got it. Makes sense. Just to follow up on that, where do you see the single-family rental business going in the medium term? What are your plans for that vertical? I want to connect that for a second for our mission. From a mission perspective, Pagaya is created to provide access to credit people through our partners, wherever they are and whatever type of loans they want to get. The same mission and vision exists for us in the residential space in the U.S. There are big part of the population in the U.S. that is looking to get access to more affordable housing and places where they should have the ability to do so in a cheaper cost on the one-hand side and not to be restricted by high-level, you know, FICO or other type of restriction things. With that in mind, we designed the... We purchased the Darwin, and to be able to connect the modern AIs that are allowing to unlock a lot of potential value of the ability to provide housing to more people residentially in a high quality through the Darwin part. In our perspective, we believe that, like, I would say the end of this year or maybe the start of next year, we're gonna start seeing material progress in that perspective from a growth initiative and from the ability to implement all of that. It will bring to real change in the way we operate. It just take a little bit of time to have the full integration and understanding and the design of the product of how you do that. We are very certain that SFR is going to become a meaningful contributor for our business in the next year or so. Yeah. Okay. Makes sense. One last question, please. You raised about $75 million last month. What are the priorities for deploying that capital, either organically or inorganically? Sure. We spoke of at the time of the, you know, opportunities that we see in the market. Just given current valuations, we think it's a really exciting time right now, where there's going to be and are potential opportunities for strategic transactions such as M&A. Primarily, the goal of that raise was to give us the resources that are necessary to be able to execute on future M&A transactions. Haven't announced anything at this point, again, we see a lot of opportunities in the market right now, this gives us the ability to execute very quickly should one of those come to fruition. Thank you. Our next question comes from Arren Cyganovich with UBS. Hi. This is Aditya Kulkarni on behalf of Arren Cyganovich. Thanks for taking my questions. Network volume and revenue and other income came in above your prior expectations for the quarter, but you're maintaining your targets for both for the full year. Can you just help us understand some of the underlying macro assumptions that are built into the full year top line outlook? Yeah, thank you very much for the question. I think it goes back a little bit to the, to the conversion rate and the discussions we had before. We have a very strong, confidence in the business and the ability to execute, but we are maintaining that guidance because, our ability to predict a conversion point in time, given the volatile market condition, could change a little bit. Therefore, we keep it as such. We prefer to be, you know, prudent and understand of where we are going. That's something we are going to assess, over the next quarters to come. I'll just add to that. Really, we're managing that conversion ratio to drive to that target return of 8%-12% for our investors, and we're really pleased that we've been able to generate that re-target return at this point. We'll continue to monitor it, but really that's going to be the driving force to allow us to toggle that conversion rate when the market improves. That's a uncertainty at this time. When the market improves, we'll be able to increase that conversion ratio, which can lead to upside on potential volume. We're not taking a view at this point of when that will happen. Understood. That's very helpful. Just as a follow-up, have you seen any material impacts from the ongoing challenges that U.S. regional banks face, particularly as it relates to partner demand for your network solution? Yeah. I wanna take you again back to the announcement we had yesterday, which we partnered with Värde Partners and Angelo Gordon to facilitate a credit union, a CU and sell a part of their portfolio. We see the impact of that from two sides. On the one-hand side, it gives us a unique opportunity to utilize the technology and the AI to facilitate more of that and to help banks, credit unions, et cetera, to get to a better funding position. With the strong relationships we have on the capital market side and the private capital bundled with a unique AI, we are kind of like in the perfect moment, in the perfect time. The other piece is that like we see part of these banks, medium-sized banks who are big buyers or big drivers of this ecosystem in the U.S., anywhere from the personal loan, through fintech lenders and up until the auto lenders that were kind of like buying or, sorry, selling loans to credit unions and others. Like it's creating a much better environment for pricing and the ability to actually provide a quality assets. In the same time, it provide us a unique opportunity to react and to be even more centralized base with our Network AI. Great. Thank you so much. Our next question comes from Hal Goetsch with B. Riley Financial. Hey, good morning, everybody. I'd like to ask a question on slide 17. It shows the percentage of volume that has increased over the past two years. It's gone from like 14% to 26%. The reference point though for, Q1 2022 is that there was a tremendous amount of lending going on, and there was high growth and high demand, and everyone was issuing lots of credit. A year later, it's a very different situation in Q1. It's very tight everywhere. My question is, what do you think is what's normal? What do you think will be a normal percentage you might have of your partner's volume in a more normalized environment? It's clearly not 14. Is it 26? Is it somewhere in between? Thank you. You're absolutely right about your observation, that you see here quarters with a very different funding or macro environment. What we have been noticing historically is that, like, once you hit these targets and these percentage points, usually the integration and the relationship between the organizations is working to keep that as such. That's becoming kind of like a sticking number. Now, it's not to say that 26 cannot go to 24, but generally speaking, the upwards trend of like different parts of the flow that is being generated by different partners, think about it more as a partnership that like once you set it up and once you grow it, and it's kind of like a lend and expand strategy, your ability to grow that over time is, is relevant. The major part of it is the ability to integrate very heavily into the way these organizations are working and to be able to provide them a real solution over time. That's why you see this percentage growing irrelevant of where the market is. It is true that the market sometimes is giving a push for acceleration of that, but the trajectory is actually to become higher and higher and hopefully above 25%. Okay. That's great. Thank you. Follow-up question would be for like a new customer, like a new platform that you've connected to through API just software like Ally, you know, or another type of aggregator of a great amount of application demand. You know, generally, what is the trajectory on like on a same- store basis that you launch and then maybe in year one, year two, year three? Like I like that term land and expand because it sounds like, hey, the volume will build over time even with an existing partner. Can you give us your thoughts on that? Yeah. I wanna actually speak about it from two lanes, if that's fine by you. Yeah. The first is the lane of like, land and expand, as we say, and we start rather small. We are learning the flow, it takes time to adjust and to create that. You can see, for example, on the auto loan slide that like both the application were 51%, but more than that, the funding through that accelerated 4x for what you will call as the first quarter that we are onboarding and up until two quarters after. The first piece of the integration is like continuing to expand, and it usually can start as low as like 1%, 2%, 3%, and in the heights of it could reach to the 25%+ that you just described in your previous question. I think there is another interesting part that people are underestimating in that segment, and this is the moat that this is creating. Think that you have a partner, and you've been working with him for three, four years, and you learn the flow and the application, and all the different type of uniqueness that that partner has. What he's actually doing is giving you a unique data advantage that your AI can convert into a higher conversion. That is by definition creating a unique advantage. It's creating the moat that others in the future will have harder time to compete with. You have all the knowledge and the connectivity for the unique characteristics of a specific channel that is making that channel in the product landscape more sticky because you have knowledge and four years of like specific data that no one else has. To your question, in the early days, it can be a few percentage points, and if we are very successful, it could come to a double digit, even like above 25%. We all do to solve for the partner needs, so every partner is a little bit different. With that, it's coming a unique advantage that we are learning this channel very much and optimizing for that, and therefore other potential competition in the future will have much harder time to penetrate into that, given the work and the uniqueness of knowledge that we have over others. Great. Thank you very much. Excuse me. For the final question, I will turn back to Gal Krubiner. Please go ahead. Thank you, operator. Now we have a unique last question, guys. As an AI-driven company, we thrive to always be at the forefront of AI innovation in line with our core values. This quarter, we decided to bring this spirit of innovation to our earnings call, potentially for the first time ever. We invited ChatGPT to our earnings Q&A session as a participant. We wanted ChatGPT to ask one question that it chose as if it were an analyst on our earnings call. Let me explain how we went about it. We uploaded our earnings materials and historical materials earnings to ChatGPT this morning and promoted it to suggest a question as if it were a sell side analyst and suggest an answer as if it were the CEO of Pagaya Technologies, which means me. I'm going to have Jency read the question that ChatGPT suggested, and I will read out loud the answer that it provided. To be clear, we did not edit or change a single word of both the question and the answer provided by ChatGPT. Here we go, Jency. Thanks, Gal. The question from ChatGPT is: How does Pagaya's rapid growth in the auto business contribute to the company's overall competitive position, and what opportunities do you see in this segment moving forward? The answer that ChatGPT provided for me to consider to say is the following: Thank you for your question. Pagaya's rapid growth in the auto business has significantly contributed to our overall competitive position by expanding our network and strengthening our AI data moats. Our connection to over 20,000 dealerships, both franchise and independent, through our partnership with major lenders, has allowed us to access a vast majority of unique data, which in turn improves the power and accuracy of our AI models. This enable us to provide better underwriting solutions and drive growth for our partners. For opportunities in this segment moving forward, we see tremendous potential in continuing to expand our partnerships and further scaling our auto business. Our recent addition of a large auto bank has already led to a 51% increase in total auto application volume evaluated by Pagaya Network. This growth not only enhance our ability to serve our existing partners but also attract new partners who recognize the value of our innovation underwriting technology. Moreover, as we continue to gain operational leverage through scale and cost management, we expect to achieve sustainable profitability, further solidifying our competitive position in the market. In summary, the rapid growth of our auto business has put Pagaya at an inflection point, we are well-positioned to capitalize on the opportunities in this segment to drive our medium-term goal of reaching $25 billion in network volume and $1 billion in Fee Revenue less Production Costs. Thank you very much, ChatGPT, for the question and the proposed answer. With that, I will make a few closing remarks. I'm confident in our ability to continue to deliver for our partners and investors. We have significant momentum as we enter Q2 and beyond, and we continue driving towards achieving our mission. Thank you all for joining us today, and we look forward to continuing to partner with you in the future. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation, and have a great day.