Key Takeaways UPST trades at a higher P/S multiple than industry peers, even as its shares lag the broader market.UPST posted 71% revenue growth in Q3 as loan demand surged, despite tighter AI-driven approval rates.UPST is expanding beyond personal loans, with auto, home and small-dollar lending gaining traction.Upstart Holdings (UPST) shares are trading at a premium, as suggested by the Value Score of D. In terms of the forward 12-month Price/Sales (P/S), Upstart is trading at 3.83X, higher than the Zacks ...

Core Insights - Nu Holdings Ltd. is a leading digital banking platform in Latin America, offering services such as credit cards, personal loans, and savings accounts, and is recognized for its innovative use of technology in banking [1] - The competitive landscape includes other fintech companies like StoneCo Ltd. and SoFi Technologies, which present varying levels of financial performance [1] Financial Performance - Nu Holdings has a Return on Invested Capital (ROIC) of 14.58%, exceeding its Weighted Average Cost of Capital (WACC) of 11.56%, indicating positive returns for investors [2][6] - The ROIC to WACC ratio for Nu Holdings is 1.26, demonstrating efficient capital utilization [2] - StoneCo Ltd. shows a significantly higher ROIC of 38.53% against a WACC of 10.70%, resulting in a ROIC to WACC ratio of 3.60, indicating superior capital management [3][6] - In contrast, SoFi Technologies has a ROIC of 5.19% with a WACC of 14.72%, leading to a ROIC to WACC ratio of 0.35, suggesting challenges in generating adequate returns [4][6] - Toast, Inc. has a ROIC of 11.43% and a WACC of 12.88%, resulting in a ROIC to WACC ratio of 0.89, indicating it is close to breaking even but still not generating returns above its cost of capital [5][6] - Overall, the analysis highlights varying efficiencies in capital utilization among digital banking platforms, with StoneCo leading the sector [5][6]

Core Insights - The company serves a significant customer base referred to as the "middle majority," which constitutes about one-third of the US population and nearly half of the credit wallet, indicating a strong market presence in the credit sector [2][3]. Customer Demographics - The average income of this customer segment is approximately $125,000, with a range from $80,000 to $200,000, highlighting a demographic that is financially capable yet reliant on credit [3]. Business Model and Strategy - The company has transitioned from a marketplace model to holding a portion of loans on its balance sheet since acquiring a bank in 2021, which enhances earnings resilience and allows for innovation [5][6]. - The company actively tests new credit products and marketing strategies on its balance sheet before releasing them to the marketplace, ensuring performance aligns with expectations [6][9]. Credit Performance - The company reports lower delinquencies, roll rates, and fraud compared to industry averages, indicating superior credit quality management [7][9]. - Continuous adjustments based on consumer behavior and market conditions contribute to consistent performance metrics [9]. Loan Origination and Market Opportunities - The company aims to double loan originations to $18 to $20 billion annually, with a focus on refinancing high-interest credit card debt, which constitutes about 80% of its business [21][22]. - The total market for credit card refinancing is substantial, with $1.3 trillion in balances at high rates, presenting a significant opportunity for growth [22]. Expansion into New Use Cases - The company is exploring new areas such as home improvement loans, which are increasingly relevant as homeowners stay in their properties longer and require upgrades [25][26]. - Other growing segments include personal loans for elective medical procedures and private school education, indicating a diversification of loan offerings [24][25]. Consumer Resilience - Despite economic challenges, the consumer segment served by the company has shown remarkable resilience, suggesting a stable demand for credit products [27].

Core Insights - Retail giants Walmart and Amazon are expanding their lending operations in India, targeting small businesses and eCommerce shoppers [2][4] Group 1: Amazon's Initiatives - Amazon plans to offer loans to small business owners in India, having acquired the nonbank lender Axio, which provides BNPL and personal loans [2] - The company aims to design tailored lending propositions to enhance cash flow management for merchants and small businesses [3] Group 2: Walmart's Flipkart Developments - Flipkart, owned by Walmart, is exploring buy now, pay later (BNPL) products and has registered its nonbank lending arm, Flipkart Finance, awaiting regulatory approval [4] - Flipkart plans to offer no-cost monthly installment loans for eCommerce shoppers and loans for consumer durables with interest rates between 18% and 26% per year, expected to launch next year [4]

Core Viewpoint - ABN AMRO has unveiled a new strategy aimed at achieving profitable growth and setting financial targets for 2028, focusing on enhancing value for stakeholders through three strategic priorities: accelerating growth, right-sizing the cost base, and optimizing capital allocation [1][2][6]. Strategic Priorities - The bank plans to accelerate profitable growth by strengthening its position in Dutch retail banking and investing in digital innovations and challenger brands [6][9]. - A significant reduction in the workforce by 5,200 FTEs is planned by 2028 compared to 2024, with a commitment to support affected employees through a robust social plan [4][17]. - Capital will be reallocated to higher-return segments, with a reduction of €10 billion in risk-weighted assets in the Corporate Bank [11]. Financial Targets for 2028 - ABN AMRO aims for a return on equity (ROE) of at least 12% and a cost/income ratio below 55% [7][8]. - The bank targets an income exceeding €10 billion and a CET1 ratio above 13.75% [8]. Long-term Ambitions - The bank seeks to become a top-five private bank in Europe and strengthen its position in Dutch retail banking [3]. - ABN AMRO will support key European transitions in digitalization, energy, mobility, and defense [3]. Leadership and Organizational Changes - The leadership team is set for continuity, with key executives nominated for a second term to ensure ownership of the strategic plans [12]. - The organizational structure is being simplified to enhance efficiency, with a focus on reducing legal entities and optimizing processes through technology [17]. Strategic Partnership - ABN AMRO has agreed to sell its personal loan business, Alfam, to Rabobank, while continuing to offer personal loans through a third-party arrangement [13].

Core Insights - Pagaya Technologies Ltd. (PGY) has demonstrated strong growth in network volume, achieving a year-over-year increase of 10.5% for the nine months ending September 30, 2025 [1][11] Business Model and Expansion - PGY has diversified its business model beyond personal loans, expanding into auto lending and point-of-sale financing, which has been a key driver of network volume growth [2][11] - The company has improved its credit trends and diversified its funding sources, including more forward flow deals and asset-backed securities (ABS) issuance, which enhances flexibility and reduces reliance on a single funding source [3][11] Financial Performance - The increase in network volume has led to a 26.7% year-over-year rise in network AI fees during the first nine months of 2025, contributing to a total revenue growth of 28.4% year-over-year [4][11] - For the full year 2025, PGY anticipates network volume to reach between $10.5 billion and $10.75 billion, supported by advancements in AI credit models and a scalable ABS platform [5] Market Position and Valuation - PGY's stock has surged by 132.8% this year, contrasting with a 10.1% decline in the industry, indicating strong investor confidence [10] - Currently, PGY trades at a 12-month forward price-to-sales (P/S) ratio of 1.13X, significantly below the industry average of 2.92X over the past three years [12] Earnings Estimates - The Zacks Consensus Estimate for PGY's earnings has increased to $3.10 for 2025 and $3.41 for 2026, reflecting year-over-year growth projections of 273.5% and 10%, respectively [13]

Core Insights - Navient Corporation (NAVI) is transitioning into a new phase of its turnaround strategy, focusing on expanding its Earnest unit into a high-growth fintech lending platform after completing a significant restructuring phase [1][6]. Group 1: Phase 1 Strategy Overview - The Phase 1 strategy, initiated in early 2024, aimed at simplification, efficiency, and capital liberation [2]. - Navient outsourced its student loan servicing business in July 2024 to adopt a variable expense model, enhancing flexibility and cost control [3]. - The company set a goal to reduce approximately $400 million in shared and corporate expenses, achieving a reduction of $119 million during Phase 1 [4]. - The financial impact of Phase 1 is projected to enhance lifetime cash flows of legacy loan portfolios by about $1.5 billion, with an annual net income benefit of approximately $1 per share [5]. Group 2: Phase 2 Strategy Update - With the restructuring largely completed, Navient is now focused on scaling its Earnest business, aiming for a capital-efficient operation [6][10]. - The Phase 1 restructuring is expected to generate an estimated $2 billion in incremental net cash flow for future investments or shareholder distributions [7]. - Navient anticipates that by 2025, Earnest will generate total revenues of $219 million and an operating profit of $75 million, with originations expected to rise to $2.4 billion [8][10]. Group 3: Market Opportunities and Growth Projections - The total addressable market for Earnest is projected to grow from $47 billion in 2026 to $101 billion by 2028, encompassing student loan refinancing and personal loans [11][13]. - Originations for Earnest are expected to increase from $971 million in 2023 to $2.4 billion in 2025, representing a 2.5 times growth [11]. - Navient's strategy includes leveraging securitizations or loan sales to reduce equity requirements for future lending, allowing for projected growth without significant new capital injections [13]. Group 4: Strategic Positioning and Future Outlook - The strategic update indicates that Navient has stabilized its foundation and is now positioned for long-term growth, moving away from reliance on legacy portfolios [14]. - The focus on Earnest as the primary growth engine is expected to facilitate entry into higher-margin digital lending markets with lower capital intensity [15]. - If execution aligns with expectations, Navient's transformation could redefine its identity from a legacy loan servicer to a competitive fintech-focused financial services platform [16].

Earnest's Strategy and Financial Performance - Navient's restructuring program has increased future cash flows, adding approximately $2 billion to existing net cash flow for growth investments or distributions[13] - Earnest aims to achieve overall efficiency equal to or greater than peers at lower breakeven volumes[15] - Earnest has over 375,000 unique customer relationships as of September 30, 2025, with over 40,000 expected to be added in 2026[20] - For 2025E, Earnest's total revenue is projected to be $219 million, with net interest income of $168 million and servicing revenue of $51 million[26] - Earnest's total assets are projected to be $10,007 million, with securitized loans of $8,255 million and equity of $724 million as of December 31, 2025[28] Growth and Efficiency Improvements - Annual originations are expected to increase 2.5x from $971 million in 2023 to $2,400 million in 2025E[37] - Quarterly rate check volume (Q3) for SLR is expected to increase 3.9x from $1.4 billion in 2023 to $5.4 billion in 2025E[37] - Sales & Marketing expenses as a percentage of originations are expected to decrease by 59% from 5.6% in 2023 to 2.3% in 2025E[37] - Loan automation (Q3) is expected to increase 1.4x from 57% in 2023 to 79% in 2025E[37] Market Opportunity and Future Plans - The total Earnest opportunity in non-education loans is projected to be $47 billion in 2026 and $101 billion in 2028[46]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $215 million, representing a 12% year-over-year increase, exceeding the guidance range of $189-$197 million [7] - Non-GAAP operating income for Q3 was $41 million, above the guidance range of $23 million-$27 million [8] - GAAP operating income for Q3 was $34 million, with trailing 12-month adjusted free cash flow increasing and a cash balance of $121 million at the end of Q3 [8][9] Business Line Data and Key Metrics Changes - Banking revenue increased by 96% year-over-year, while personal loans revenue rose by 91% year-over-year [7] - The insurance business saw a 3% year-over-year increase, slightly better than expected [7] - SMB products and credit cards experienced a decline year-over-year due to organic search headwinds [7] Market Data and Key Metrics Changes - The company is seeing momentum with referrals from large language models (LLMs), which convert at a higher rate than traditional organic traffic [5] - Traffic from LLMs is currently small but shows potential for growth, prompting continued investment in this channel [5] Company Strategy and Development Direction - The company aims to expand its reach to below-prime consumers, enhancing its product offerings and operational efficiency [4][6] - There is a focus on converting traffic into a loyal audience through personalized engagement strategies [6] - The company plans to return to typical levels of brand marketing spend in Q4 after reevaluating its brand strategy [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term prospects, emphasizing sustainable growth, strong free cash flow generation, and disciplined capital allocation [7] - For Q4, the company expects revenue in the range of $207 million-$250 million, with continued strength in banking and personal loans, but challenges in credit cards and SMB [9][10] - Non-GAAP operating income for Q4 is expected to be between $20 million and $24 million, reflecting improvements in shopping funnels and operational efficiency [10] Other Important Information - The company completed $19 million in share repurchases during the quarter, reflecting confidence in long-term prospects [9] - Management noted that the brand is a significant asset and is continuously looking for ways to enhance its impact [20] Q&A Session Summary Question: Insights on LLM traffic growth and investments - Management indicated that LLM traffic is converting at stronger rates and investments are similar to those made for organic search [12][14] Question: Drivers of banking category growth - The increase in banking demand is attributed to both consumer and partner demand, with improvements in product funnels to match user intent [16][18] Question: Reevaluation of brand spend - The company underspent on brand marketing by $8 million in Q3 due to a reevaluation of its brand strategy, with plans to return to typical spending levels in Q4 [19][20] Question: Content strategy for below-prime consumers - The company has historically had content for all consumers, and the focus is on filling out the marketplace to better serve unmet needs [21][22]

Investor Day 2025 NOVEMBER 5, 2025 Agenda 10:35-10:50 BREAK 1:20-1:30 CLOSE SCOTT SANBORN, CHIEF EXECUTIVE OFFICER 2 9:05-9:25 WELCOME SCOTT SANBORN, CHIEF EXECUTIVE OFFICER 9:25-9:45 CREDIT KIRAN AWARE, HEAD OF CREDIT STRATEGY & PRICING 9:45-10:05 LENDING STEVE MATTICS, CHIEF LENDING OFFICER 10:05-10:25 ENGAGEMENT MARK ELLIOT, CHIEF CUSTOMER OFFICER 10:25-10:35 Questions & Answers 10:50-11:10 TECHNOLOGY LUKASZ STROZEK, CHIEF TECHNOLOGY OFFICER 11:10-11:30 OUR MODEL DREW LABENNE, CHIEF FINANCIAL OFFICER 11: ...