Upstart (UPST) Q2 2024 earnings summary

Executive summary

• Achieved sequential growth and improved EBITDA profitability, with Q2 2024 revenue at $127.6M–$128M, down 6% year-over-year, and a net loss of $54.5M; automation reached a record 91% of loans fully automated.

• Major internal improvements in AI model accuracy, funding partnerships, and operational efficiency drove progress, not macro tailwinds.

• Workforce reductions of 10% in Q2 2024 and 20% in January 2023 were implemented to streamline operations and reduce costs.

• HELOC product expanded to 30 states plus DC, with instant approval rate rising to 42% and zero defaults to date.

Financial highlights

• Q2 revenue from fees was $130.5M–$131M, down 9% year-over-year; net interest income was -$3M; net revenue for Q2 was $128M, $3M above guidance.

• Contribution margin was 58%, down from 67% in Q2 2023; contribution profit was $76.1M.

• Operating expenses were $183M, flat to up 8% year-over-year; GAAP net loss was $54.5M, adjusted EBITDA was -$9.3M, and adjusted EPS was -$0.17.

• Cash and restricted cash at quarter end was $560.6M, up from $509.9M at the start of the year.

• Loan transactions reached 143,900–144,000, up 31% year-over-year; average loan size decreased to $7,700.

Outlook and guidance

• Q3 2024 guidance: total revenues of ~$150M, fee revenue ~$155M, contribution margin ~57%, net loss of ~$49M, adjusted EBITDA of ~$-5M.

• Second half 2024: fee revenue of ~$320M and positive adjusted EBITDA in Q4.

• Guidance does not assume macro improvement or interest rate cuts; any such changes would be tailwinds.