Sign in

You're signed outSign in or to get full access.

UH

Upstart Holdings, Inc. (UPST)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was a strong seasonal quarter: total revenue $213.37M, up 67% YoY; adjusted EBITDA $42.58M (20% margin) and adjusted diluted EPS $0.30; GAAP net loss narrowed to ($2.45)M .
  • Results beat consensus on revenue and adjusted EPS; contribution margin came in at 55% versus 57% prior guide, reflecting mix shift toward super-prime at lower take rates; net interest income outperformed guidance by ~$13M, driven by higher spreads and fair value gains as UMI trended down .
  • Q2 2025 guidance: revenue ~$225M, adjusted net income ~$25M, adjusted EBITDA ~$37M; FY 2025 guidance raised to revenue ~$1.01B, net interest income ~$90M, adjusted EBITDA margin ~19%, with GAAP profitability in 2H and for full year .
  • Strategic catalysts: $1.2B forward-flow partnership with Fortress, expanding committed capital; “AI Day” underscored modeling innovations (embeddings, automation) and funding resilience—key narrative tailwinds for the stock .

What Went Well and What Went Wrong

What Went Well

  • Accelerating originations and funnel efficiency: 240,706 loans (+102% YoY); conversion rate rose to 19.1% (from 14.0% YoY); 92% of loans fully automated—an all-time high .
  • Revenue and profitability improved: total revenue $213.37M (+67% YoY); adjusted EBITDA $42.58M versus ($20.34)M YoY; adjusted net income $31.19M .
  • Management execution and innovation: “We continue to raise the bar in AI-enabled lending,” said CEO Dave Girouard; new embeddings introduced in underwriting; auto and HELOC originations grew rapidly; first instant approval for auto refi in 9 minutes .

What Went Wrong

  • Contribution margin fell to 55% (from 59% YoY; and ~2pp below prior guidance) due to mix shifting toward super-prime with lower take rates and early-stage margins in new products (HELOC, auto) .
  • Variable costs rose sequentially vs slightly lower transaction volume; GAAP operating expenses $217.87M; contribution margin pressure tied to competitive segments .
  • Macro uncertainties persist (tariff risk, reinflation) and funding markets remain noisy (ABS spreads wider), although committed capital relationships mitigated funding risk .

Financial Results

Core P&L and EPS vs prior year/quarters and estimates

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Total Revenue ($USD)$127.79M $162.14M $218.96M $213.37M
Revenue from Fees ($USD)$138.07M $167.59M $199.28M $185.48M
Net Interest Income (Loss) ($USD)($10.27M) ($5.45M) $19.69M $27.90M
GAAP Diluted EPS ($)($0.74) ($0.07) ($0.03) ($0.03)
Adjusted Diluted EPS ($)($0.31) ($0.06) $0.26 $0.30
Adjusted EBITDA ($USD)($20.34M) $1.41M $38.78M $42.58M
Adjusted EBITDA Margin (%)(16%) 1% 18% 20%
Contribution Profit ($USD)$81.14M $102.38M $121.90M $102.37M
Contribution Margin (%)59% 61% 61% 55%
Operating Margin (%)(49%) (27%) (2%) (2%)

Revenue mix

Revenue from Fees BreakdownQ1 2024Q4 2024Q1 2025
Platform & Referral Fees ($USD)$103.86M $165.76M $150.98M
Servicing & Other Fees ($USD)$34.21M $33.52M $34.50M
Total Fees ($USD)$138.07M $199.28M $185.48M

KPIs

KPIQ1 2024Q4 2024Q1 2025
Transaction Volume, Dollars ($USD)$1,130.80M $2,107.47M $2,133.61M
Number of Loans (units)119,380 245,663 240,706
Conversion Rate (%)14.0% 19.3% 19.1%
% Loans Fully Automated (%)90% 91% 92%
Adjusted Net Income ($USD)($27.17M) $29.94M $31.19M

Against Wall Street consensus (S&P Global)

MetricConsensus (Q1 2025)Actual (Q1 2025)
Revenue ($USD)$201.26M*$213.37M
EPS Normalized ($)$0.171*$0.30 (Adjusted diluted)
EBITDA ($USD)$25.58M*$42.58M (Adjusted)

Values marked with * retrieved from S&P Global.

Key takeaways vs estimates: Revenue and adjusted EPS were material beats; adjusted EBITDA handily exceeded consensus. Contribution margin softness (55%) stemmed from mix/take-rate dynamics rather than cost blowouts .

Guidance Changes

MetricPeriodPrevious Guidance (as of 2/11/25)Current Guidance (as of 5/6/25)Change
Total Revenue ($USD)Q2 2025N/A~$225M New
Revenue from Fees ($USD)Q2 2025N/A~$210M New
Net Interest Income ($USD)Q2 2025N/A~$15M New
Contribution Margin (%)Q2 2025N/A~55% New
GAAP Net Income ($USD)Q2 2025N/A~($10)M New
Adjusted Net Income ($USD)Q2 2025N/A~$25M New
Adjusted EBITDA ($USD)Q2 2025N/A~$37M New
Basic/Diluted Shares (M)Q2 2025N/A~96 / ~104 New
Total Revenue ($USD)FY 2025~$1.00B ~$1.01B Raised
Revenue from Fees ($USD)FY 2025~$920M ~$920M Maintained
Net Interest Income ($USD)FY 2025~$80M ~$90M Raised
Adjusted EBITDA Margin (%)FY 2025~18% ~19% Raised
GAAP Net IncomeFY 2025At least breakeven Positive in 2H and for full year Raised specificity

Context: CFO cited stronger-than-expected net interest income (fair value gains and spreads), while mix into super-prime lowers take rates and contribution margin near-term .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/Model InnovationModel 18 drove conversion; PTM launched; automation rising Embeddings added to core underwriting; pipeline “beyond robust” Accelerating
Automation~90–91% fully automated; instant approvals rising 92% fully automated; first 9-minute instant auto refi approval Improving
Funding & Committed CapitalBlue Owl/Atalaya $2B; >50% committed; ABS reopened Fortress $1.2B forward-flow; >50% funding via committed partners; ABS deal oversubscribed Strengthening resiliency
Macro/UMIStabilizing defaults; rate cuts modest tailwind; conservative underwriting UMI elevated but stable; tariff/reinflation risks; planning for no rate cuts Cautious but steady
Product Performance (Auto/HELOC/SDL)Auto +46–60% seq; HELOC 0 defaults; SDL grew >100% seq Auto originations +42% seq; HELOC +52% seq; SDL +7% seq, ~16% of new borrowers Scaling (early margins)
Super-Prime Expansion (T-Prime)Program launched; thin margins but positive unit economics Mix shift to prime/super-prime lowers take rates; adds capital partners; 32% of originations super-prime Mix expanding to prime
ABS MarketTightening spreads; opportunistic use Recent $320M ABS printed well; spreads wider vs earlier; opportunistic channel Functioning, variable spreads
Walmart/OnePay PartnershipN/A1-year agreement via OnePay; early stage, not in guidance Potential distribution upside

Management Commentary

  • “With an unparalleled pace of innovation, we continue to raise the bar in AI-enabled lending.” — Dave Girouard, CEO .
  • “Embeddings…convert complex unstructured data into useful model inputs…applying them to credit underwriting is entirely novel.” — CEO on model innovation .
  • “Q1 came in slightly ahead…owing primarily to higher-than-anticipated net interest income…half from higher net interest spreads…and half from unrealized fair value gains as the declining UMI trend worked its way into our marks.” — CFO .
  • “We remain extremely pleased with our network of third-party capital…well north of 50% of funding on our platform, and they are demonstrating their intended resilience.” — CFO on funding mix .

Q&A Highlights

  • Funding resilience: No pullbacks from private credit partners or banks/credit unions; committed partnerships behaving “exactly as designed” to navigate cycles .
  • Contribution margin outlook: Lower take rates in prime/super-prime and early-stage margins in HELOC/auto weigh on average; expect ~55% near-term .
  • ABS channel: Latest $320M deal oversubscribed; used opportunistically, not a growth dependency .
  • Walmart/OnePay: Upstart controls underwriting; JV/co-invest structure; not material to 2025 guidance yet; potential upside .
  • Guidance framing: Assumes steady macro, no rate cuts, continued model wins; FY revenue raised to $1.01B; NII to $90M; GAAP net income positive in 2H/full-year .

Estimates Context

  • Q1 2025 beats: Revenue $213.37M vs $201.26M consensus*; adjusted diluted EPS $0.30 vs $0.171 consensus*; adjusted EBITDA $42.58M vs $25.58M consensus*. Mix shift lowered contribution margin to 55% (below prior guide), but net interest income outperformance bridged top/bottom-line beats .
  • FY 2025 consensus implies ~$1.036B revenue* and ~$229.53M EBITDA*; company raised its revenue/NII and margin outlook, suggesting upward estimate revisions if execution continues.
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Narrative inflection: Strong Q1 with clear beats on revenue and adjusted EPS; guidance raised for FY revenue/NII/margins; funding resiliency de-risks growth trajectory .
  • Watch the mix: Expansion into super-prime compresses take rates and contribution margin, but adds durable, diversified capital and broadens TAM; margin dollars still accretive .
  • Model velocity as moat: Embeddings/PTM and rising automation (92%) continue to drive conversion and approvals; expect sustained algorithmic improvements to support growth even in steady macro .
  • Capital catalysts: Fortress $1.2B forward-flow and ongoing ABS access provide optionality; >50% committed funding supports scalability through market uncertainty .
  • Near-term trading lens: Potential positive sentiment on estimate revisions and AI Day visibility; monitor contribution margin trajectory and any tariff/macro headlines that could pressure credit/funding spreads .
  • Medium-term thesis: Path to GAAP profitability in 2H 2025 with raised margin targets; diversified product stack (auto/HELOC/SDL) maturing; funding partnerships lower cyclicality and support scale .
  • Risk checks: Macro (reinflation/tariffs), competitive pricing in prime segments, and early-stage margin profiles in HELOC/auto; management’s conservative underwriting and rapid model adaptation mitigate downside .

Appendix: Other Q1 2025 Press Releases

  • Fortress forward-flow agreement: Up to $1.2B of consumer loans through March 2026; Citi to provide debt financing to Fortress .
  • Q1 results press release: Detailed P&L and KPI disclosures; reiterated AI Day and guidance .

Notes:

  • Non-GAAP definitions and reconciliations are provided in the company’s 8-K and press release (adjusted EBITDA includes interest expense from corporate/warehouse facilities; adjusted net income excludes SBC and certain items) .
  • Management’s macro stance is conservative (no rate cuts assumed; UMI stable but elevated) with rapid model adaptation and built-in conservatism in underwriting .