Upstart(US:UPST)2025-05-06 20:30Financial 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]