Group 1: Palantir Technologies - Palantir develops data analytics software for commercial and government sectors, with core platforms Gotham and Foundry that integrate complex data and machine learning models [2] - The company reported a 39% increase in revenue to $884 million and a 62% increase in non-GAAP earnings to $0.13 per diluted share, with total customers climbing 39% to 769 [4] - Despite strong financial results, the stock fell sharply due to concerns over valuation, with a forward price-to-sales ratio significantly higher than competitors [5][6] - Analysts have set a target price of $40 per share, indicating a 64% downside from the current price of $110 [10] Group 2: Upstart Holdings - Upstart provides an AI lending platform that automates credit decisions, considering over 2,500 variables compared to the traditional FICO score [8][9] - The company reported a 67% increase in revenue to $2.1 billion, with positive non-GAAP earnings of $0.30 per diluted share, up from a loss in the same quarter last year [11] - Analysts have set a target price of $15 per share for Upstart, implying a 67% downside from its current price of $46 [10] - The outlook for Upstart is mixed, with potential growth due to expected Federal Reserve rate cuts, but also risks from economic uncertainty and tariffs [13][14]

Core Viewpoint - Upstart's Q1 earnings report demonstrated strong growth driven by its new AI model, Model 18, which significantly improved its conversion rates and overall business performance [1][2][3]. Financial Performance - Revenue increased by 67% to $213.4 million, surpassing estimates of $201.3 million, with fees revenue growing by 34% to $185.5 million [2]. - Loan originations rose by 102% to 240,706 loans, while total originations increased by 89% to over $2.1 billion [3]. - Adjusted EBITDA improved from a loss of $20.3 million to a profit of $42.6 million, with a GAAP loss of $2.4 million, an improvement from a loss of $64.6 million a year ago [4]. Earnings Per Share - Adjusted per-share profit was reported at $0.30, exceeding the consensus estimate of $0.17 and improving from an adjusted loss of $0.31 in the same quarter last year [5]. Guidance and Market Reaction - Despite strong Q1 results, Upstart maintained its full-year guidance, projecting Q2 revenue of $225 million, slightly below the consensus of $226.3 million, leading to a 16% drop in after-hours trading [7][8]. Business Diversification - Upstart has diversified its offerings, with auto loans growing fivefold to $61 million and home loan originations increasing sixfold to $41 million, indicating a shift towards secured loans [9]. Strategic Partnerships - A one-year strategic partnership with OnePay, majority-owned by Walmart, aims to market lending products to Walmart's customer base, presenting a significant growth opportunity [10]. - Fortress Investment Group has committed to purchasing up to $1.2 billion in loans originated on Upstart, enhancing the company's funding base [11]. Valuation and Growth Potential - Following the after-hours sell-off, Upstart's forward P/E ratio is at 31 based on adjusted earnings, with potential for further declines as analysts adjust forecasts [12]. - The company is positioned for growth in the auto and home loan markets, with proprietary data indicating a modest improvement in the macroenvironment [13]. Overall Business Outlook - Upstart's business is strengthening, technology is advancing, and the current valuation appears attractive, with an upcoming "AI day" planned to discuss technology updates and business strategy [14].

Artificial intelligence (AI) lending stock Upstart Holdings Inc (NASDAQ:UPST) was last seen down 11.9% at $45.27, brushing off upbeat first-quarter results as well as a strong full-year forecast, after the company's second-quarter outlook spooked investors. No fewer than four analysts slashed their price targets after the event, including Morgan Stanley all the way to $50 from $70. Options traders are blasting Upstart stock in response. So far today, 62,000 calls and 47,000 puts have been exchanged , which ...

Core Insights - Upstart Holdings, Inc. reported first-quarter earnings of 30 cents per share, exceeding the analyst consensus estimate of 17 cents, with quarterly revenue of $213.37 million, up from $127.79 million year-over-year, and beating the consensus estimate of $199.49 million [1][3] Group 1: Financial Performance - The company achieved a revenue increase of 66.9% year-over-year, reflecting strong growth in its lending operations [1] - Upstart slightly raised its full-year revenue outlook, primarily driven by interest income, and increased its EBITDA margin guidance by 100 basis points [3] - Analysts project revenue growth of +58.9% in FY25 and +25.8% in FY26 [4] Group 2: Analyst Perspectives - JPMorgan noted that Upstart is experiencing a flywheel effect, where improved repayment data enhances risk detection, leading to higher loan approval rates and overall volume [1] - Piper Sandler highlighted the potential of Upstart's AI-driven lending platform, especially as the loan funding environment improves, and noted that over half of its originations are now supported by committed capital partners [2] - Analysts have differing ratings, with JPMorgan maintaining a Neutral rating and lowering the price forecast from $79 to $64, while Piper Sandler maintained an Overweight rating with a price forecast of $69 [5]

Core Insights - Upstart Holdings, Inc. reported a revenue of $213.37 million for the quarter ended March 2025, marking a year-over-year increase of 67% and exceeding the Zacks Consensus Estimate of $200.74 million by 6.29% [1] - The company achieved an EPS of $0.30, a significant improvement from -$0.31 a year ago, with an EPS surprise of 57.89% compared to the consensus estimate of $0.19 [1] Financial Performance Metrics - Upstart's transaction volume reached $2.13 million, surpassing the average estimate of $1.90 million by two analysts [4] - Revenue from fees, net, was reported at $185.48 million, slightly above the average estimate of $185.42 million based on five analysts, reflecting a year-over-year increase of 34.3% [4] - Total interest income, interest expense, and fair value adjustments, net, amounted to $27.90 million, significantly lower than the estimated $15.28 million, indicating a drastic year-over-year change of -371.5% [4] - Revenue from platform and referral fees, net, was $150.98 million, exceeding the estimate of $148.10 million and showing a year-over-year increase of 45.4% [4] - Revenue from servicing and other fees, net, was reported at $34.50 million, below the average estimate of $37.57 million, with a year-over-year change of 0.9% [4] Stock Performance - Over the past month, Upstart shares have returned 37.6%, outperforming the Zacks S&P 500 composite's return of 11.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Upstart experienced significant growth in loan originations, with a year-over-year increase of 89% to $2.1 billion, primarily driven by personal loans which grew 83% [1][3] - The company is expanding into the super-prime borrower segment, which now represents 32% of total originations [1][3] - Despite positive growth metrics and management's commentary on improved borrower health, shares fell over 18% in after-hours trading due to a slight decrease in contribution margins [1][4] Loan Originations - Total platform originations reached $2.1 billion, with personal loans accounting for $2 billion, reflecting an 83% increase year-over-year [3] - Automated processes contributed to nearly 92% of loans being originated without human intervention [3] Financial Performance - Revenue increased by 67% due to higher conversion rates on lending, as stated by CEO Dave Girouard [4] - Average loan size increased to approximately $8,865 from $8,580 in the previous quarter, influenced by a higher proportion of loans to super-prime borrowers [8] Automation and Technology - The company introduced embedding algorithms to enhance its personal loan underwriting model, improving accuracy and credit decision-making [5] - Upstart automated 90% of hardship applications in Q1, streamlining processes for borrowers [7] Other Lending Segments - Car loan originations grew 42% sequentially, while home equity line of credit (HELOC) originations surged 52% quarter-over-quarter and more than 6 times year-over-year [6] - Short-term lending accounted for 16% of new borrowers in the quarter [6] Future Outlook - The company projects revenues of $225 million for the current quarter, representing a 75% increase compared to the same period last year [10] - CFO Sanjay Datta noted that while macroeconomic factors have not significantly impacted credit performance, there is increased uncertainty with potential upside and downside scenarios [9][10]

Upstart, which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $213.37 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.29%. This compares to year-ago revenues of $127.79 million. The company has topped consensus revenue estimates four times over the last four quarters. Upstart Holdings, Inc. (UPST) came out with quarterly earnings of $0.30 per share, beating the Zacks Consensus Estimate of $0.19 per share. This compares to loss of $ ...

Financial Data and Key Metrics Changes - In Q1 2025, total revenue reached approximately $213 million, representing a 67% year-on-year growth [26] - Adjusted EBITDA was $43 million, indicating a significant scaling in operating leverage [29] - GAAP net loss was $2 million, which was better than expectations, reflecting strong performance on net interest income [28] Business Line Data and Key Metrics Changes - Platform originations grew 89% year-on-year, with personal loan originations flat sequentially but up 83% year-on-year [5][9] - Home and Auto lending saw sequential growth rates of 5242% and 42% respectively, with auto lending growing almost 5x compared to a year ago [6][13] - HELOC originations grew 52% quarter-on-quarter and more than 6x year-on-year [16] Market Data and Key Metrics Changes - The volume of loan transactions across the platform was approximately 241,000, up 102% from the prior year [27] - Average loan size increased to approximately $8,865 from $8,580 in the prior quarter [27] - The Upstart Macro Index remains elevated but stable, indicating improving consumer financial health [6] Company Strategy and Development Direction - The company aims to return to GAAP net income profitability in the second half of the year, with a focus on expanding both core and newer products [21][33] - Upstart is prioritizing AI advancements, with a goal to enhance its leadership in AI lending and improve risk models [20][24] - The company is diversifying its funding sources, with over 50% of loan funding now in committed partnership agreements [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to changing macroeconomic conditions, noting that credit performance has remained stable despite recent market turbulence [7][31] - The company is cautious about potential risks from reinflation and is planning for a steady macro environment [31] - Guidance for Q2 includes total revenues of approximately $225 million, with expectations for continued strong demand for credit [32] Other Important Information - The company has signed a one-year agreement with Walmart's FinTech, One Pay, to make its products available to Walmart customers [36] - Upstart's HELOC product has expanded its footprint to 37 states plus Washington D.C., covering almost 75% of the U.S. population [16] Q&A Session Summary Question: Can you talk about the Walmart partnership? - Management confirmed a one-year agreement with Walmart's FinTech, emphasizing the alignment of values in delivering consumer value [36][37] Question: Any trends in April and early May? - Management indicated that guidance captures the current trends, providing limited additional color [39] Question: Thoughts on conversion rates for the remainder of the year? - Management expects conversion rates to improve with better models and automation, aiming to reach around 20% [45] Question: Why is the 2025 outlook not higher despite new funding? - Management clarified that funding is not the gating item for growth; rather, it is the economic acquisition of the right borrowers [102] Question: How are funding partners reacting to market volatility? - Management reported no pullbacks from committed capital partners, indicating resilience in funding sources [70] Question: How is Upstart adapting to macroeconomic changes? - Management emphasized the adaptability of their models and a conservative approach to planning, with no assumptions of Fed rate cuts this year [74]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was approximately $213 million, representing a 67% year-on-year increase [26] - Adjusted EBITDA reached $43 million, marking a significant improvement in operating leverage [30] - GAAP net loss was $2 million, which was better than expectations, reflecting strong net interest income performance [30] Business Line Data and Key Metrics Changes - Platform originations grew 89% year-on-year, with personal loan originations up 83% year-on-year [5][8] - Home and Auto lending saw sequential growth rates of 5242% and 42% respectively [6][13] - HELOC originations grew 52% quarter-on-quarter and more than 6x year-on-year [16] Market Data and Key Metrics Changes - The volume of loan transactions across the platform was approximately 241,000, up 102% from the prior year [27] - Average loan size increased to approximately $8,865 from $8,580 in the prior quarter [28] - The Upstart Macro Index remains elevated but stable, indicating improving consumer financial health [6] Company Strategy and Development Direction - The company aims to return to GAAP net income profitability in the second half of 2025 [22] - Focus on enhancing AI capabilities and expanding product offerings to maintain competitive advantage [21] - Plans to diversify funding sources and strengthen partnerships, with over 50% of loan funding in committed partnerships [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to changing macroeconomic conditions, despite potential risks from government trade policies [7] - The macroeconomic environment is expected to remain stable, with no explicit expectation of rate cuts [32] - Management remains cautious about fixed costs and hiring, reflecting a conservative approach to business planning [75] Other Important Information - The company has signed a one-year agreement with Walmart's fintech subsidiary, One Pay, to offer products to Walmart customers [36] - The introduction of machine learning techniques, such as embeddings, is expected to enhance credit performance predictions [12] Q&A Session Summary Question: Can you talk about the Walmart partnership? - The company signed a one-year agreement with Walmart's fintech, One Pay, to make products available to Walmart customers, which has already been launched [36][37] Question: Can you provide trends in April and early May? - Management indicated that guidance captures the current quarter's trends, providing limited additional color [39] Question: How should we think about conversion rates for the remainder of the year? - Conversion rates increased from 14% to 19%, with expectations to drive them higher through improved models and automation [44] Question: Why was the 2025 outlook not increased despite new funding? - The company was never short of funding; the gating item is the economic acquisition of the right borrowers [104] Question: How have funding partners reacted to market volatility? - Committed partnerships are performing as designed, with no pullbacks from private credit partners or banks [72] Question: How is the company adapting to macroeconomic changes? - The company relies on adaptive models and conservatism in planning, with no assumptions of Fed rate cuts this year [75]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was approximately $213 million, representing a 67% year-on-year increase [27] - Revenue from fees was $185 million, up 34% year-on-year, while net interest income was approximately $28 million, exceeding expectations by $13 million [28] - Adjusted EBITDA reached $43 million, indicating significant operating leverage [30] Business Line Data and Key Metrics Changes - Platform originations grew 89% year-on-year, with personal loan originations flat sequentially but up 83% year-on-year [7][10] - Home and Auto lending saw sequential growth rates of 5242% and 42% respectively, with auto lending growing almost 5x compared to a year ago [8][14] - HELOC originations grew 52% quarter-on-quarter and more than 6x year-on-year [17] Market Data and Key Metrics Changes - The volume of loan transactions across the platform was approximately 241,000, up 102% from the prior year [28] - Average loan size increased to approximately $8,865 from $8,580 in the prior quarter [28] - The Upstart Macro Index remains elevated but stable, indicating improving consumer financial health [9] Company Strategy and Development Direction - The company aims to 10x its leadership in AI, focusing on model improvements and automation to enhance conversion rates [21] - Plans to return to GAAP net income profitability in the second half of the year, with a focus on expanding both core and new products [23] - The strategy includes diversifying into super prime loans while maintaining competitive rates and processes [24][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to changing macroeconomic conditions, noting that credit performance has remained stable despite recent market turbulence [9][27] - The company is cautious about potential risks from reinflation and is planning for a steady macro environment without expecting rate cuts [32][33] - Management remains optimistic about the demand for personal loans, particularly as the tax season ends [56] Other Important Information - The company signed a one-year agreement with Walmart's FinTech subsidiary, One Pay, to offer its products to Walmart customers [37][38] - A universal shelf and a $500 million at-the-market program were established to enhance balance sheet flexibility [31] Q&A Session Summary Question: Can you talk about the Walmart partnership? - The company signed a one-year agreement with Walmart's One Pay to make its products available to Walmart customers, which has already been launched [37][38] Question: Can you provide trends in April and early May? - Management indicated that guidance captures the current quarter's trends, providing limited additional color [40] Question: How should we think about conversion rates for the remainder of the year? - Conversion rates grew from 14% to 19%, with expectations to drive them higher through better models and automation [45] Question: Why was the 2025 outlook not increased despite new funding? - The company was never short of funding; the gating item for growth is the economic acquisition of the right borrowers [102] Question: How have funding partners reacted to market volatility? - Committed partnerships have performed as designed, with no pullbacks from private credit partners or banks [71] Question: How is the company adapting to macroeconomic changes? - The company relies on adaptive models and has built conservatism into its planning, ensuring readiness for macro changes [74]