Upstart Announces Fourth Quarter and Full Year 2024 Results

Upstart Holdings, Inc. (NASDAQ:UPST), the leading artificial intelligence (AI) lending marketplace, today announced financial results for the quarter and full year ended December 31, 2024. Upstart will host a conference call and webcast at 1:30 p.m. Pacific Time today. An earnings presentation and link to the webcast are available at ir.upstart.com.

"In Q4 of 2024, our business grew dramatically across all product categories, delivered Adjusted EBITDA at levels not seen since the first quarter of 2022, and came within a whisker of returning to GAAP profitability," said Dave Girouard, co-founder and CEO of Upstart. "We launched into 2025 with unparalleled energy and optimism for the future of Upstart AI lending and the mission we're on together."

Fourth Quarter 2024 Financial Highlights

• Total Revenue was $219 million, up 56% year-over-year ("YoY") and up 35% quarter-over-quarter ("QoQ"). Total fee revenue was $199 million, an increase of 30% YoY, and up 19% QoQ.

• Transaction Volume and Conversion Rate: 245,663 loans were originated, totaling $2.1 billion, up 68% YoY and up 33% QoQ. Our Conversion Rate was 19.3%, up from 11.6% in Q4 2023.

• Income (Loss) from Operations was ($4.8) million, up from ($47.5) million in Q4 2023.

• Net Income (Loss) and EPS: GAAP net income (loss) was ($2.8) million, up from ($42.4) million in Q4 2023. Adjusted net income (loss) was $29.9 million, up from ($9.7) million in Q4 2023. Accordingly, GAAP diluted earnings per share was ($0.03), and diluted adjusted earnings per share was $0.26 based on the weighted-average common shares outstanding during the quarter.

• Contribution Profit was $122 million in the fourth quarter of 2024, up 28% YoY, with a Contribution Margin of 61% compared to 63% in Q4 2023.

• Adjusted EBITDA was $38.8 million, up from $0.6 million in the same quarter of the prior year. Adjusted EBITDA Margin was 18% of total revenue, up from 0% in Q4 2023.

Fiscal Year 2024 Financial Highlights

• Total Revenue was $637 million, up 24% YoY. Total fee revenue was $635 million, up 13% YoY.

• Transaction Volume and Conversion Rate: 697,092 loans were originated, totaling $5.9 billion, up 28% YoY. Our Conversion Rate was 16.5% in 2024, up from 9.7% in 2023.

• Income (Loss) from Operations was ($173) million, up from ($257) million in 2023.

• Net Income (Loss) and EPS: GAAP net income (loss) was ($129) million, up from ($240) million in 2023. Adjusted net income (loss) was ($17.8) million, up from ($46.9) million in 2023. Accordingly, GAAP diluted earnings per share was ($1.44), and diluted adjusted earnings per share was ($0.20) based on the weighted-average common shares outstanding during the year.

• Contribution Profit was $382 million in 2024, up 8% YoY, with a Contribution Margin of 60% compared to 63% in 2023.

• Adjusted EBITDA was $10.6 million, up from ($17.2) million in 2023. 2024 Adjusted EBITDA Margin was 2% of total revenue, up from (3)% in 2023.

Financial Outlook

For the first quarter of 2025, Upstart expects:

• Revenue of approximately $200 million
  • Revenue From Fees of approximately $185 million
  • Net Interest Income (Loss) of approximately $15 million
• Contribution Margin of approximately 57%
• GAAP Net Income (Loss) of approximately ($20) million
• Adjusted Net Income (Loss) of approximately $16 million
• Adjusted EBITDA of approximately $27 million
• Basic Weighted-Average Share Count of approximately 95 million shares
• Diluted Weighted-Average Share Count of approximately 105 million shares

For full year 2025, Upstart expects:

• Revenue of approximately $1 billion
  • Revenue From Fees of approximately $920 million
  • Net Interest Income (Loss) of approximately $80 million
• Adjusted EBITDA Margin of approximately 18%
• GAAP Net Income to be at least breakeven

Upstart AI Day

Upstart will host "Upstart AI Day" on May 14, 2025, in New York City where members of the leadership team will discuss the Company's technology along with its business model and strategy. A live audio webcast and presentation slides will be posted on the day of the event to the Company's investor relations website at ir.upstart.com.

Key Operating Metrics and Non-GAAP Financial Measures

For a description of our key operating measures, please see the section titled "Key Operating Metrics" below.

Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled "About Non-GAAP Financial Measures" below.

Conference Call and Webcast

• Live Conference Call and Webcast at 1:30 p.m. PT on February 11, 2025. To access the call in the United States and Canada: +1 888-394-8218, conference code 1025998. To access the call outside of the United States and Canada: +1 313-209-4906, conference code 1025998. A webcast is available at ir.upstart.com.
• Event Replay. A webcast of the event will be archived for one year at ir.upstart.com.

About Upstart

Upstart (NASDAQ:UPST) is the leading AI lending marketplace, connecting millions of consumers to more than 100 banks and credit unions that leverage Upstart's AI models and cloud applications to deliver superior credit products. With Upstart AI, lenders can approve more borrowers at lower rates across races, ages, and genders, while delivering the exceptional digital-first experience customers demand. More than 80% of borrowers are approved instantly, with no human involvement required by the Company. Founded in 2012, Upstart's platform includes personal loans, automotive retail and refinance loans, home equity lines of credit, and small-dollar "relief" loans. Upstart is based in San Mateo, California, and also has offices in Columbus, Ohio, New York, New York, and Austin, Texas.

Forward-Looking Statements

This press release contains forward-looking statements, including but not limited to, statements regarding our outlook for the first quarter of 2025 and the full fiscal year, continuing to strengthen our position as the fintech leader in artificial intelligence, and our growth expectations. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "target", "aim", "believe", "may", "will", "should", "becoming", "look forward", "could", "can have", "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements give our current expectations and projections relating to our financial condition; macroeconomic factors; plans; objectives; product development; growth opportunities; assumptions; risks; future performance; business; investments; and results of operations, including revenue (including revenue from fees and net interest income (loss)), contribution margin, net income (loss), non-GAAP adjusted net income (loss), Adjusted EBITDA, basic weighted-average share count and diluted weighted-average share count. Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements included in this press release and on the related conference call and webcast relate only to events as of the date hereof. Upstart undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. More information about factors that could affect our results of operations and risks and uncertainties are provided in our public filings with the Securities and Exchange Commission (the "SEC"), copies of which may be obtained by visiting our investor relations website at www.upstart.com or the SEC's website at www.sec.gov. These risks and uncertainties include, but are not limited to, our ability to manage the adverse effects of macroeconomic conditions and disruptions in the banking sector and credit markets, including inflation and related changes in interest rates and monetary policy; our ability to access sufficient loan funding, including through securitizations, committed capital and other co-investment arrangements, whole loan sales, and warehouse credit facilities; the effectiveness of our credit decisioning models and risk management efforts, including reflecting the impact of macroeconomic conditions on borrowers' credit risk; our ability to retain existing, and attract new, lending partners; our future growth prospects and financial performance; our ability to manage risks associated with the loans on our balance sheet; our ability to improve and expand our platform and products; and our ability to operate successfully in a highly-regulated industry.

Key Operating Metrics

We review a number of operating metrics, including transaction volume, dollars; transaction volume, number of loans; and conversion rate to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

We define "transaction volume, dollars" as the total principal of loan originations (or committed amounts for HELOCs) facilitated on our marketplace during the periods presented. We define "transaction volume, number of loans" as the number of loan originations (or commitments issued for HELOCs) facilitated on our marketplace during the periods presented. We believe these metrics are good proxies for our overall scale and reach as a platform.

We define "conversion rate" as the transaction volume, number of loans in a period divided by the number of rate inquiries received that we estimate to be legitimate, which we record when a borrower requests a loan offer on our platform. We track this metric to understand the impact of improvements to the efficiency of our borrower funnel on our overall growth.

About Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), we believe the non-GAAP measures of Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) Per Share are useful in evaluating our operating performance. Certain of these non-GAAP measures exclude stock-based compensation and certain payroll tax expense, expense on convertible notes, depreciation, amortization, as well as certain items that are not related to core business and ongoing operations, such as gain on debt extinguishment, net gain on lease modification, and reorganization expenses. We exclude stock-based compensation, expense on convertible notes and other non-operating expenses because they are non-cash in nature and are excluded in order to facilitate comparisons to other companies' results.

We believe non-GAAP information is useful in evaluating the operating results, ongoing operations, and for internal planning and forecasting purposes. We also believe that non-GAAP financial measures provide consistency and comparability with past financial performance and assist investors with comparing Upstart to other companies, some of which use similar non-GAAP financial measures to supplement their GAAP results. However, non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for, or superior to, financial information presented in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies.

Key limitations of our non-GAAP financial measures include:

• Contribution Profit and Contribution Margin are not GAAP financial measures of, nor do they imply, profitability. Even if our revenue exceeds variable expenses over time, we may not be able to achieve or maintain profitability, and the relationship of revenue to variable expenses is not necessarily indicative of future performance;
• Contribution Profit and Contribution Margin do not reflect all of our variable expenses and involve some judgment and discretion around what costs vary directly with loan volume. Other companies that present contribution profit and contribution margin may calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours;
• Although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• Adjusted EBITDA and Adjusted EBITDA Margin exclude stock-based compensation expense and certain employer payroll taxes on employee stock transactions. Stock-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. The amount of employer payroll tax-related expense on employee stock transactions is dependent on our stock price and other factors that are beyond our control and which may not correlate to the operation of the business;
• Adjusted EBITDA and Adjusted EBITDA Margin do not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us; and
• The expenses and other items that we exclude in our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA and adjusted EBITDA margin when they report their operating results.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included below. Upstart has not reconciled the forward-looking non-GAAP measures to comparable forward-looking GAAP measures because of the potential variability and uncertainty of incurring these costs and expenses in the future. Accordingly, a reconciliation is not available without unreasonable effort.

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Tom Brennan

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Sonya Banerjee

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