Upstart (UPST) Q3 2024 earnings summary

Executive summary

• Achieved 20% year-over-year and 43% sequential growth in lending volume, with Q3 2024 revenue reaching $162.1 million and a return to positive adjusted EBITDA ahead of schedule.

• Originated 188,149 loans totaling $1.6 billion, a 30% increase year-over-year, with conversion rate rising to 16.3% and over 90% of loans fully automated.

• Model 18 AI upgrade and automation drove significant conversion improvements, with 92% of instant approvals converting to funded loans.

• Expansion into super-prime segment with T-Prime program, strong growth in auto and HELOC products, and a $2 billion loan purchase agreement with Blue Owl/Atalaya.

• Funding supply is more durable, with over half of loan funding from long-term committed partnerships and co-investment structures.

Financial highlights

• Q3 2024 total revenue was $162.1 million, up 20% year-over-year and 27% sequentially; fee revenue was $168 million, up 14% year-over-year and 28% sequentially.

• Net loss improved to $(6.8) million from $(40.3) million year-over-year; adjusted EBITDA was $1.4 million, with a 1% margin.

• Contribution margin was 61%, up 3 points sequentially but down from 64% a year ago.

• Cash and restricted cash totaled $655.8 million at quarter-end, with loans at fair value on the balance sheet at $656.1 million.

• Transaction volume reached 188,149 loans ($1.58 billion), up 65% in number and 30% in dollars year-over-year.

Outlook and guidance

• Q4 2024 guidance: total revenue of ~$180 million, fee revenue of $185 million, net interest income of -$5 million, contribution margin at 59%, and adjusted EBITDA of $5 million.

• Net loss guidance of $(35) million GAAP and $(5) million adjusted; share count expected at 91.7 million.

• Management expects continued investment in AI and product development to drive long-term growth.

• Committed capital and co-investment arrangements are expected to provide stability in loan funding.

• Macro environment expected to remain stable, with modest volume lift from recent Fed rate cut.