Upstart Holdings Down 6% in After Hours Following Q3 Earnings Miss

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]