Financial Data and Key Metrics Changes - In Q3 2025, total revenue reached approximately $277 million, reflecting a 71% year-on-year increase and an 8% sequential increase [23] - GAAP net income for Q3 was approximately $32 million, significantly ahead of expectations, driven by strong net interest income and reduced fixed costs [26] - The contribution margin was 57%, down approximately one percentage point from the prior quarter due to lower conversion rates impacting acquisition costs [25] Business Line Data and Key Metrics Changes - Transaction volume across the platform was approximately 428,000, up 128% year-on-year and 15% sequentially, representing around 300,000 new borrowers [24] - New products, including small-dollar loans, auto, and home loans, accounted for nearly 12% of originations and 22% of new borrowers in Q3, with transaction volume for these products growing around 300% year-on-year [8][9] - The average loan size decreased to approximately $6,670, a 12% decline from the prior quarter, influenced by borrower requests for lower amounts and a shift towards smaller loan products [24] Market Data and Key Metrics Changes - Consumer demand remained strong, with over two million applications submitted in Q3, a 30% increase from Q2, marking the highest level in over three years [6] - The Upstart Macro Index (UMI) showed a modest increase in July and August, which led to a temporary reduction in approval rates and an increase in interest rates [7][8] - Despite macroeconomic caution, there were no signs of material deterioration in consumer credit strength, with indications of improvement noted [8] Company Strategy and Development Direction - The company aims to leverage AI technology to lead the trillion-dollar credit industry, focusing on rapid growth, profitability, and AI leadership [5] - Upstart is expanding its auto retail business, having doubled the number of lending rooftops and achieved over 70% sequential growth in transaction volume [9] - The company is also working on a hybrid product called an auto-secured personal loan, which is gaining traction [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the macroeconomic environment, emphasizing the importance of precise risk pricing [8] - The outlook for Q4 includes expected total revenues of approximately $288 million, with a focus on maintaining profitability and managing costs effectively [31] - Management anticipates that improvements in repayment speeds could lead to a long-anticipated tailwind for growth prospects heading into next year [23] Other Important Information - The company has added seven new bank and credit union partners in Q3, achieving a new all-time high in monthly available funding [10] - Upstart's platform has generated over $50 billion in AI-powered loans since inception, showcasing the strength of its AI capabilities [12] - The company is focused on reducing R&D-related balance sheet holdings and transitioning new products into the scale-up phase [26][27] Q&A Session Summary Question: Application demand and guidance - A participant inquired about the strong application demand and how it aligns with the guidance provided, which was below expectations. Management noted that while applications grew significantly, the model's conservatism impacted transaction volume [34][35] Question: Impact of recent credit events in the auto sector - Another participant asked if recent negative credit events in the auto sector affected expansion plans. Management confirmed that there was no direct impact, although increased diligence was observed in the market [39][40] Question: Quality of leads from marketing improvements - A question was raised regarding the quality of leads generated from new marketing capabilities. Management indicated that while application volume increased, the model's conservatism led to a lower conversion rate [46][48] Question: Repayment speeds and credit implications - A participant asked about the increase in repayment speeds and its implications for credit performance. Management suggested that faster repayments could indicate improving consumer health, although it may lead to lower interest income in the short term [72][74] Question: Conversion rate drivers - A question was posed about the factors affecting the conversion rate. Management clarified that the primary driver was the model's conservatism, which impacted approvals and loan sizes [64][65] Question: HELOC product economics - A participant inquired about the economics of the HELOC product. Management indicated that while take rates would be healthy, they would be more modest compared to personal loans, but with larger loan sizes [82]

Financial Data and Key Metrics Changes - Upstart reported total revenue of approximately $277 million for Q3 2025, representing a 71% year-on-year increase and an 8% sequential increase [23] - GAAP net income for Q3 was approximately $32 million, significantly ahead of expectations, reflecting strong performance in net interest income and reduced fixed costs [26] - The contribution margin, a non-GAAP metric, was 57% in Q3, down approximately one percentage point from the prior quarter due to lower conversion rates [25] Business Line Data and Key Metrics Changes - Transaction volume across Upstart's platform was approximately 428,000, up 128% year-on-year and 15% sequentially, with about 300,000 new borrowers [24] - New products, including small-dollar loans, auto, and home loans, accounted for almost 12% of originations and 22% of new borrowers in Q3, with transaction volume for these products growing around 300% year-on-year [6][9] - The auto retail business saw transaction volume grow more than 70% sequentially, with significant improvements in software and expansion into four new states [7] Market Data and Key Metrics Changes - Consumer demand remained strong, with over two million applications submitted in Q3, up over 30% from Q2, marking the highest level in over three years [5] - The Upstart Macro Index (UMI) showed a modest uptick in July and August, which led to a temporary reduction in approval rates and an increase in interest rates [5][21] - The average loan size decreased by 12% from the prior quarter, influenced by borrowers requesting lower amounts and a shift towards smaller loan products [24] Company Strategy and Development Direction - Upstart aims to leverage its AI technology to lead the trillion-dollar credit industry, focusing on rapid growth, profitability, and AI leadership [4] - The company is transitioning multiple new products from R&D to scale-up phase, with expectations of tangible outcomes from third-party capital arrangements by the end of the year [27] - Upstart's strategy includes maintaining a disciplined approach to underwriting risk while capitalizing on improving credit health indicators [21][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of Upstart's AI models to respond to macroeconomic changes, emphasizing that recent model conservatism was a temporary adjustment [13][19] - The company anticipates a favorable economic backdrop for credit in Q4, with expectations of improved consumer financial health and lower investor return requirements [28][29] - Management highlighted the importance of maintaining credit performance as a priority for long-term business success [21] Other Important Information - Upstart's platform has generated over $50 billion in AI-powered loans since inception, showcasing the effectiveness of its AI technology [11] - The company has added seven new bank and credit union partners in Q3, achieving a new all-time high in monthly available funding [10] - Upstart's unique partnerships allow it to offer competitive rates, with some products providing rates up to 300 basis points better than other fintechs [8] Q&A Session Summary Question: Application demand and guidance - Management noted a 30% quarter-on-quarter growth in applications, highlighting that the model's conservatism impacted transaction volume despite strong demand [34][36] Question: Impact of recent credit events in the auto sector - Management confirmed that recent negative credit events did not directly impact Upstart's expansion plans, as they have rigorous underwriting processes in place [38][40] Question: Superprime segment performance - Management acknowledged that model tightness affected originations in the superprime segment, which is also highly competitive [41][42] Question: Quality of leads from marketing improvements - Management indicated that while application volume increased, the model's conservatism led to a lower likelihood of approval, affecting conversion rates [45][46] Question: Balance sheet expansion and funding partner conversations - Management expressed optimism about ongoing conversations with funding partners, noting that appetite remains strong despite longer diligence processes [57][59] Question: Factors affecting conversion rates - Management clarified that the primary driver of the conversion rate decline was the model's conservatism, with no other significant factors at play [62][63]

Market Overview - U.S. equities faced a significant downturn on November 4, 2025, with all three major indexes closing in the red, particularly the tech-heavy Nasdaq Composite, which led the declines [1][2] - The S&P 500 fell 1.2% to 6,771 points, while the Dow Jones Industrial Average decreased by 0.5% or approximately 238 points to 47,085, and the Nasdaq Composite dropped 2% to 23,348 [2] - The Cboe Volatility Index (VIX) surged 10% to 18.9, indicating increased investor apprehension amid concerns over valuations and a potential market correction [2] Economic Data and Events - The ongoing U.S. government shutdown is delaying key economic data releases, increasing focus on private sector data [3] - The ADP employment report is anticipated, which may provide insights into hiring trends following a dip in September [3] - The ISM Manufacturing PMI declined to 48.7 in October from 49.1 in September, marking the eighth consecutive month of contraction [4] Corporate Developments - Palantir Technologies (PLTR) saw a significant decline of 7.9% despite surpassing analysts' forecasts for sales and profit, raising concerns over high valuations [5] - Nvidia (NVDA) fell 4%, and Microsoft (MSFT) dipped 1%, reflecting growing concerns about the sustainability of the AI rally [5] - Uber Technologies (UBER) slumped 6.3% despite reporting better-than-expected financial results [5] - Yum! Brands (YUM) rose 6.1% after announcing strong quarterly results and considering selling its Pizza Hut unit [5] - Kinross Gold Corporation (KGC) reported robust third-quarter results, including record free cash flow and an increase in share buyback target and dividend [6] Earnings Announcements - Advanced Micro Devices, Inc. (AMD) is expected to report a 27.63% year-over-year increase in earnings per share [10] - Arista Networks, Inc. (ANET) is forecasted to see a 14.04% increase in earnings per share [10] - Axon Enterprise, Inc. (AXON) plunged 20% in after-hours trading following a Q3 earnings miss [10] - Digital Turbine (APPS) surged 22% in after-hours trading after reporting its FY 2026 Q2 earnings [10]

Core Insights - Upstart Holdings, Inc. reported third-quarter earnings that missed revenue estimates, leading to a decline in stock price [1][5] Financial Performance - Quarterly earnings were 52 cents per share, exceeding the Street estimate of 42 cents [2] - Quarterly revenue was $277.1 million, falling short of the consensus estimate of $279.62 million [2] - Total loan originations reached approximately $2.9 billion, representing an 80% year-over-year increase [3][4] Operational Metrics - The company originated 428,056 loans, marking a 128% increase year-over-year, with a conversion rate of 20.6%, up from 16.3% [3] - The CEO highlighted a sixfold sequential increase in GAAP net income and 71% growth in revenue year-over-year [4] Future Outlook - For the fourth quarter, Upstart anticipates revenue of $288 million, below the analyst estimate of $303.61 million [5] - The fiscal 2025 revenue outlook has been revised down from $1.05 billion to $1.03 billion, compared to the previous estimate of $1.05 billion [5]

Core Insights - Upstart Holdings reported its first earnings miss in five consecutive quarters, with adjusted EPS of $0.23 against expectations of $0.43 and revenue of $277.11 million, missing the $285.22 million estimate [2][4][7] Financial Performance - Revenue increased by 71% year over year, with loan originations surging 80% to $2.9 billion [3][7] - The company returned to GAAP profitability with a net income of $31.81 million, compared to a loss of $6.76 million in Q3 2024 [3][6] - Adjusted EBITDA rose dramatically to $71.16 million from $1.41 million, representing a 26% margin [3][7] - Fee revenue grew 54% year over year to $259 million, with over 90% of loans processed fully automated [5] Cash Flow and Guidance - Operating cash flow turned negative at -$256.28 million, and free cash flow fell to -$270.58 million, indicating a significant weakness despite strong profitability metrics [6][10] - Management guided Q4 2025 revenue to approximately $288 million with adjusted EBITDA of $63 million and a contribution margin of 53% [6] Management Commentary - CEO Dave Girouard expressed optimism about the company's execution on its 2025 growth plan, emphasizing strong credit performance and the adaptability of its AI platform [8] - Management did not signal material concerns about demand or market conditions heading into the final quarter [8] Key Metrics - Adjusted EPS: $0.23 (down 47% from estimate) [7] - Revenue: $277.11 million (down 2.8% from estimate) [7] - Gross Profit: $258.54 million [7] - Operating Income: $23.71 million [7] - Loan Originations: $2.9 billion (up 80% year over year) [7]

Q3 2025 earnings November 4, 2025 Forward looking statements This presentation contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to, information or predictions concerning our future financial performance, including our financial outlook for Q4 2025 and the full fiscal year 2025 under the heading "Outlook" and management's estimates under the heading " ...

Financial Performance - Transaction Volume, Dollars increased by 80% in Q3 2025 compared to Q3 2024, reaching $2,854,296, and increased by 104% in the nine months ended September 30, 2025, totaling $7,808,302[324]. - Transaction Volume, Number of Loans rose by 128% in Q3 2025 and 131% in the nine months ended September 30, 2025, with 428,056 loans in Q3 2025 and 1,041,361 loans in the nine months[324]. - The Conversion Rate improved to 20.6% in Q3 2025 and 21.2% in the nine months ended September 30, 2025, up from 16.3% and 15.3% in the same periods of 2024[327]. - Contribution Profit for Q3 2025 was $147,406, with a Contribution Margin of 57%[316]. - Adjusted EBITDA for Q3 2025 was $71,162, reflecting an Adjusted EBITDA Margin of 26%[316]. - Adjusted Net Income for Q3 2025 was $59,963, compared to a loss of $5,325 in Q3 2024[316]. - Total revenue for the nine months ended September 30, 2025, was $747.8 million, a $248.6 million increase, or 57%, compared to the same period in 2024[362]. - Net income for Q3 2025 was $31.8 million, compared to a net loss of $6.8 million in Q3 2024[365]. - Adjusted Net Income for the three months ended September 30, 2025, was $60.0 million, compared to an Adjusted Net Loss of $5.3 million in the same period of 2024[399]. Revenue Generation - Revenue from fees, net for the three months ended September 30, 2024, was $167.59 million, a significant increase from $258.54 million for the same period in 2025[335]. - Revenue from fees, net increased by $90.9 million, or 54%, in Q3 2025 compared to Q3 2024, driven by an 80% increase in transaction volume from $1,582.3 million to $2,854.3 million[361]. - Platform and referral fees, net increased by $82.7 million, or 62%, in Q3 2025 compared to Q3 2024[361]. - The company recognizes fees from auto dealers for using Upstart Auto Finance software, contributing to revenue generation[347]. Expenses and Costs - Operating expenses for Q3 2025 were $253.4 million, an increase from $207.3 million in Q3 2024[365]. - Sales and marketing expenses increased by $35.6 million, or 82%, in Q3 2025 compared to Q3 2024, driven primarily by a $34.5 million increase in advertising and borrower acquisition costs[371]. - Borrower acquisition costs for the three months ended September 30, 2024, were $32.75 million, while borrower verification and servicing costs were $32.47 million, totaling direct expenses of $65.21 million[335]. - Customer operations expenses increased by $10.5 million, or 27%, in Q3 2025 compared to Q3 2024, primarily due to a $6.6 million increase in information verification expenses[373]. - General, administrative, and other expenses increased by $0.9 million, or 2%, in Q3 2025 compared to Q3 2024, primarily due to a $1.0 million increase in payroll and other personnel-related expenses[378]. Cash Flow and Financing - Cash and cash equivalents as of September 30, 2025, totaled $489.8 million, providing a strong liquidity position for the company[401]. - Net cash provided by financing activities for the nine months ended September 30, 2025, was $425.8 million, a significant increase compared to $50.5 million in the same period of 2024[412]. - Net cash used in operating activities was $256.3 million for the nine months ended September 30, 2025, with a net income of $35.0 million[414]. - Net cash used in investing activities was $308.9 million, primarily due to $666.0 million in purchases and originations of loans held-for-investment[415]. - The company has entered into an "at the market" offering program with an aggregate offering price of up to $500 million, providing potential for future capital raising[402]. Loan and Investment Management - As of September 30, 2025, the company held $1,230.0 million of loans on its balance sheet, with $871.3 million originated for research and development purposes[418]. - The total loan purchase commitment as of September 30, 2025, was $113.7 million, indicating ongoing investment in loan purchases from lending partners[408]. - The company plans to sell loans held on its balance sheet to institutional investors over time through secondary sales or securitizations[418]. - The company has an aggregate principal balance of $1.69 billion in convertible senior notes, with varying interest rates and maturities between 2026 and 2032[405]. Risk Management - The Upstart Macro Index (UMI) was measured at approximately 1.54, indicating an incremental risk of 54% to repayment performance compared to the baseline[315]. - As of September 30, 2025, the company was exposed to market discount rate risk on $1,165.9 million of loans held on its balance sheet[426]. - A hypothetical 100 basis point increase in the discount rate would result in a $14.0 million decrease in the fair value of loans as of September 30, 2025[426]. - As of September 30, 2025, the company was exposed to credit risk on $1,165.9 million of loans held on its balance sheet[432]. - A hypothetical 10% increase in credit risk would result in a $13.1 million decrease in the fair value of loans as of September 30, 2025[432]. Impairment and Valuation - The company assesses its non-marketable equity securities for impairment on a quarterly basis, considering both qualitative and quantitative factors[442]. - Impairment analysis includes evaluation of the investee's financial metrics, market acceptance of the investee's product or technology, general market conditions, and liquidity considerations[442]. - Adjustments and impairments are recorded in other expense on the condensed consolidated statements of operations and comprehensive income (loss) upon recognition[442]. - The complexity of assessing fair values is due to the lack of readily available market data for privately-held companies[442].

Financial Performance - In Q3 2025, Upstart reported a 80% year-on-year growth in originations, totaling approximately $2.9 billion[3]. - Total revenue for Q3 2025 was $277 million, reflecting a 71% increase year-on-year, with revenue from fees at $259 million, up 54% year-on-year[6]. - GAAP net income for Q3 2025 was $31.8 million, an improvement from a loss of $6.8 million in Q3 2024, resulting in diluted net income per share of $0.23[6]. - Contribution profit reached $147 million, up 44% year-on-year, with a contribution margin of 57%[6]. - Adjusted EBITDA for Q3 2025 was $71.2 million, significantly up from $1.4 million in Q3 2024, with an adjusted EBITDA margin of 26%[6]. - Total revenue for the nine months ended September 30, 2025, was $747,767, compared to $417,564 in the same period of 2024, marking an increase of 79%[40]. - Adjusted net income for Q3 2025 was $59,963, a significant turnaround from a loss of $5,325 in Q3 2024[43]. - The company reported a net income of $31,805 for Q3 2025, a significant improvement from a net loss of $6,758 in Q3 2024, highlighting a positive trend in profitability[40]. Operational Metrics - Upstart expects to originate approximately 428,056 loans in Q4 2025, representing a 128% year-over-year increase[6]. - The conversion rate improved to 20.6% in Q3 2025, up from 16.3% in Q3 2024[6]. - The number of loans processed increased to 428,056 in Q3 2025, up from 188,149 in Q3 2024, indicating a growth of 127%[32]. - The percentage of loans fully automated remained stable at 91% across both Q3 2024 and Q3 2025, reflecting consistent operational capabilities[32]. - Borrower acquisition costs for the nine months ended September 30, 2025, totaled $176.8 million, compared to $80.8 million in the same period of 2024, indicating increased investment in customer acquisition[36]. Balance Sheet - Total assets increased to approximately $2.9 billion as of September 30, 2025, compared to $2.37 billion at the end of 2024[20]. - The company’s total liabilities rose to approximately $2.16 billion as of September 30, 2025, up from $1.73 billion at the end of 2024[20]. - Upstart's cash and cash equivalents decreased to $489.8 million as of September 30, 2025, down from $788.4 million at the end of 2024[20]. - Cash, cash equivalents, and restricted cash at the end of the period for September 30, 2024, were $655,767, compared to $836,905 for the same period in 2025, indicating a decrease of 21.6%[30]. Year-over-Year Comparisons - Total revenue for the three months ended September 30, 2024, was $162,140, a decrease from $277,105 in the same period of 2025, representing a decline of 41.4%[23]. - Net income for the three months ended September 30, 2024, was a loss of $6,758, compared to a net income of $31,805 for the same period in 2025, indicating a significant turnaround[23]. - Revenue from fees, net for the nine months ended September 30, 2024, was $436,190, while for the same period in 2025, it increased to $684,791, reflecting a growth of 56.9%[23]. - Operating expenses for the three months ended September 30, 2024, totaled $207,292, compared to $253,439 in the same period of 2025, showing a decrease of 18.2%[23]. - The company experienced a gain on debt extinguishment of $33,361 for the three months ended September 30, 2024, compared to $7,246 in the same period of 2025[23]. - The total fair value and other adjustments, net for the three months ended September 30, 2024, were $(35,477), while for the same period in 2025, it was $(29,843), indicating an improvement[25]. Transaction Volume - Transaction volume for the three months ended September 30, 2025, reached $2,854,296, representing a significant increase from $1,582,317 in the same period of 2024[32].

Core Insights - Upstart Holdings (UPST) is expected to report its third-quarter 2025 results on November 4, with management guiding revenues of $280 million and adjusted net income of approximately $44 million [1][6] - The Zacks Consensus Estimate for quarterly revenues is $281.02 million, reflecting a 73.3% increase year-over-year, while the consensus for earnings is 42 cents per share, a significant rise from a loss of 6 cents in the previous year [1][9] Financial Projections - For the full year 2025, management projects revenues of $1.055 billion and GAAP net income of approximately $35 million [2] - The Zacks Consensus Estimate for UPST's full-year revenues is $963.4 million, indicating a 51.36% year-over-year increase, with an EPS consensus of $1.66, up from a loss of 20 cents per share in the prior year [2] Earnings Surprise History - Upstart has a strong earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 192.09% [3] Earnings Prediction Model - The proprietary model does not predict an earnings beat for Upstart this time, as it has an Earnings ESP of 0.00% and a Zacks Rank 3 (Hold) [4][5] Revenue and Profitability Drivers - Management expects Q3 revenues of $280 million, with fee-based income contributing approximately $275 million and net interest income around $5 million [8][11] - The new underwriting model, Model 22, has improved conversion rates and is expected to sustain revenue growth, while tighter cost controls are anticipated to maintain a solid contribution margin [10] Market Performance and Valuation - Upstart's shares have declined 8.6% over the past six months, underperforming peers like LendingClub and SoFi, which have seen significant gains [12] - The stock is currently considered overvalued, with a Price/Sales ratio of 3.70X, above the industry average of 3.28X [13] Competitive Position and Growth Outlook - Upstart is making progress with revenue recovery and profitability, expanding into new lending verticals, and attracting new lending partners [17] - However, exposure to credit-sensitive borrowers and market liquidity challenges may create volatility in growth [18]

Institutional Investment Activity - Ameritas Advisory Services LLC acquired a new position in Upstart worth approximately $34,000 during the 2nd quarter [1] - GAMMA Investing LLC increased its position by 23.3% in the 1st quarter, now owning 1,662 shares valued at $77,000 after purchasing an additional 314 shares [1] - Bogart Wealth LLC grew its position by 140.0% in the 2nd quarter, now holding 1,200 shares worth $78,000 after acquiring 700 shares [1] - PNC Financial Services Group Inc. increased its position by 385.1% in the 1st quarter, now owning 1,950 shares valued at $90,000 after buying 1,548 shares [1] - NewEdge Advisors LLC lifted its holdings by 20.0% in the 1st quarter, now owning 1,997 shares worth $92,000 after acquiring 333 shares [1] - Institutional investors and hedge funds collectively own 63.01% of Upstart's stock [1] Analyst Ratings and Price Targets - Bank of America reduced its price target from $88.00 to $87.00, maintaining a "neutral" rating [2] - JPMorgan Chase & Co. upgraded its rating from "neutral" to "overweight," lowering the price target from $93.00 to $88.00 [2] - Goldman Sachs cut its price target from $78.00 to $54.00, assigning a "sell" rating [2] - Piper Sandler set a price target of $80.00 [2] - Morgan Stanley reaffirmed an "equal weight" rating [2] - The consensus rating for Upstart is "Hold" with a target price of $78.83 [2] Insider Trading Activity - CFO Sanjay Datta sold 13,473 shares at an average price of $61.12, totaling $823,469.76, reducing his ownership by 4.33% [3] - Director Kerry Whorton Cooper sold 500 shares at an average price of $69.21, totaling $34,605.00, representing a 1.93% decrease in ownership [3] - Insiders have sold 106,214 shares worth $6,803,558 over the last 90 days, with insiders owning 16.67% of the company's stock [3] Financial Performance - Upstart reported $0.36 EPS for the last quarter, exceeding the consensus estimate of $0.27 by $0.09 [5] - Revenue for the quarter was $257.29 million, surpassing the consensus estimate of $225.35 million, reflecting a year-over-year increase of 101.6% [5] - The company had a negative net margin of 0.75% and a negative return on equity of 5.95% [5] - Upstart's FY 2025 guidance includes EPS expectations, with analysts forecasting -0.03 EPS for the current year [5] Stock Performance and Market Metrics - Upstart shares opened at $47.52, with a market cap of $4.57 billion and a price-to-earnings ratio of -594.00 [4] - The stock has a beta of 2.27, indicating higher volatility compared to the market [4] - The 50-day simple moving average is $58.50, and the 200-day simple moving average is $59.96 [4] - The stock has experienced a one-year low of $31.40 and a one-year high of $96.43 [4]