Pagaya Technologies Ltd. (PGY) Cash Flow Statement

The conversion ratio has trended downward from 4.36 in 2025Q1 to 0.99 in 2026Q3, indicating that the gap between cash and accounting profit has narrowed as net income recovered. The 2026Q3 ratio near 1.0 means that quarter's cash generation roughly matched reported earnings, which investors should monitor to determine whether it reflects normalization or a temporary working capital effect. Because the cash flows are tied to loan and platform activity, the high historical ratios warrant further investigation into how much of operating cash reflects timing rather than durable earnings power.

FCF margins moved from negative in 2024Q3 to a peak of 23.9% and have since settled in the low-to-mid teens, which appears more consistent with a business still transitioning out of its trough than one that has reached a stable cash profile. Capital expenditure remained minimal relative to revenue throughout, so FCF movements are driven mainly by operating cash swings and working capital rather than investment spending. Investors should treat the 2025Q4 peak as a high-water mark that may not be repeatable without further evidence of stable working capital behavior.

The magnitude of working capital swings relative to operating cash flow indicates that reported quarterly cash generation is highly sensitive to the timing of receivables, loan-related balances, and payables. The 2026Q3 outflow of $59.0M largely offset operating cash flow of $49.0M, which may indicate a build in operating assets that warrants further investigation rather than a clear signal of deterioration. Given these swings, the reliability of any single quarter's cash conversion metric is limited.

Low and fairly stable capex intensity is consistent with a technology platform that relies on software and data infrastructure rather than heavy physical assets, which supports the strength of reported FCF conversion. The 2025Q4 spike appears to be a discrete item rather than a shift in run-rate spending, though the reported data does not disclose its composition. Because maintenance versus growth capex is not separately identified, investors should monitor whether the periodic larger outlays reflect capitalized development costs.

The cumulative gap indicates that non-cash charges and one-time items drove much of the reported loss, while underlying cash generation persisted even during the trough. This pattern may suggest that earnings are sensitive to credit provisioning and funding costs, which are accounting-driven rather than cash-driven in the near term. Investors should monitor whether cash conversion remains above net income as credit conditions evolve, since a reversal would challenge the current interpretation.