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].