In This Article:
Key Points
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Upstart's first-quarter results had a number of encouraging trends, including a huge rise in loan originations and better profit figures than most had expected.
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Investors might have looked at sequential weakness compared to the fourth quarter of 2024 as an indicator of slowing positive momentum.
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Upstart made another large loan participation agreement today, showing its ability to keep its balance sheet clear of credit risk.
Here's our initial take on Upstart Holdings' (NASDAQ: UPST) first-quarter financial report.
Key Metrics
| Metric | Q1 2024 | Q1 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Production-adjusted revenue | $127.8 million | $213.4 million | +67% | Beat |
| Adjusted earnings per share | ($0.31) | $0.30 | N/M | Beat |
| Adjusted EBITDA | ($20.3 million) | $42.6 million | N/M | n/a |
| Unit loan transaction volume | 119,380 | 240,706 | +102% | n/a |
Upstart Can't Satisfy Shareholders
Upstart's first-quarter financial results had a number of figures that looked good on a year-over-year basis. Loan origination volume in dollar terms was up 89% from last year's period to $2.1 billion. Revenue climbed 67%, while Upstart came close to breaking even under generally accepted accounting principles and reversed year-ago losses with positive adjusted net income and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Conversion rates rose from 14% a year ago to 19.1%, helping the number of loans completed using the Upstart platform more than double from the first quarter of 2024. Key figures were higher than investors had generally anticipated.
Upstart also had positive comments about its products and technology. New embedding algorithms are making the company's AI-powered personal loan underwriting more effective, and all but 8% of loans were fully automated on the platform. Upstart was also pleased to see more highly rated superprime borrowers take out loans, as those loans helped to balance Upstart's overall portfolio.
However, it appears that most of those following Upstart instead focused on a couple of things. First, even with the solid performance in the first quarter, Upstart didn't make major moves to its guidance for the full year. The company raised its revenue expectations by just $10 million, or 1%, and all of that gain will come from higher expected net interest income rather than fee revenue. In addition, when you look at the numbers compared to the fourth quarter of 2024, you can see a number of areas in which Upstart saw sequential downturns or more sluggish growth.