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Upstart Holdings, Inc. (UPST)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was a step-change quarter: revenue of $218.964M (+35% QoQ, +56% YoY), Adjusted EBITDA of $38.775M (18% margin), and GAAP net loss narrowed to $(2.755)M; diluted Adjusted EPS was $0.26 versus GAAP diluted EPS of $(0.03) .
  • The company materially beat its Q3 guidance on every major metric (revenue, contribution margin, Adjusted EBITDA, Adjusted net income) and flipped net interest income to positive as macro credit (UMI) improved and older vintages rolled off .
  • 2025 outlook sets a bullish tone: Q1 2025 revenue ~$200M, FY 2025 revenue ~$1B with ~18% Adjusted EBITDA margin and at least GAAP breakeven; management targets GAAP profitability in H2 2025 .
  • Key catalysts: new model innovations (Model 19/PTM), robust funding pipeline (committed capital, Blue Owl $2B programmatic purchase), and strong product traction (HELOC/auto/SDL) underpin conversion gains and margin resilience .

What Went Well and What Went Wrong

What Went Well

  • Conversion and revenue engines accelerated: Q4 conversion rate rose to 19.3% (from 11.6% a year ago), driving revenue to $218.964M and contribution margin to 61% .
  • Model wins and launch of PTM (Model 19) improved underwriting accuracy and funnel conversion; CEO: “our business grew dramatically… came within a whisker of returning to GAAP profitability” .
  • Funding resilience and positive NII: CFO cited ~$20M net interest income as older vintages ran off and UMI declined; committed capital expanded, and Blue Owl committed up to $2B over 18 months .

What Went Wrong

  • GAAP profitability not yet achieved: GAAP net loss remained $(2.755)M despite strong non-GAAP results; operating expenses grew 8% QoQ with catch-up accruals .
  • Take rate/CM pressure risks: management noted possible future trade-offs (lower take rates to drive volume) and paid acquisition scaling could compress contribution margins from ~61% as platform expands .
  • Balance sheet loans rose sequentially (timing mismatch versus capital arrangements), though management expects continued reduction over 2025 .

Financial Results

Metric (Units)Q2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$127.630 $162.140 $218.964
GAAP Diluted EPS ($)$(0.62) $(0.07) $(0.03)
Adjusted Diluted EPS ($)$(0.17) $(0.06) $0.26
Contribution Margin (%)58% 61% 61%
Adjusted EBITDA ($USD Millions)$(9.256) $1.413 $38.775
Adjusted EBITDA Margin (%)(7)% 1% 18%
Operating Margin (%)(43)% (27)% (2)%

Revenue components:

Revenue Components ($USD Millions)Q2 2024Q3 2024Q4 2024
Revenue from fees, net$130.532 $167.590 $199.276
Total interest income/expense/fair value, net$(2.902) $(5.450) $19.688
Total Revenue$127.630 $162.140 $218.964

Key operating KPIs:

KPIQ2 2024Q3 2024Q4 2024
Transaction Volume ($USD Billions)~$1.1B ~$1.6B $2.107B
Number of Loans143,900 188,149 245,663
Conversion Rate (%)15.0% 16.3% 19.3%
% Fully Automated91% —91%

Notes on non-GAAP: Adjusted results exclude stock-based compensation and certain payroll taxes, convertible notes expense, depreciation/amortization, and other non-core items; reconciliations provided in filings .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Total Revenue ($M)Q4 2024~$180 $218.964 Beat
Revenue from Fees ($M)Q4 2024~$185 $199.276 Beat
Net Interest Income (Loss) ($M)Q4 2024~$(5) $19.688 Beat
Contribution Margin (%)Q4 2024~59% 61% Beat
Adjusted EBITDA ($M)Q4 2024~$5 $38.775 Beat
Adjusted Net Income ($M)Q4 2024~$(5) $29.935 Beat
GAAP Net Income ($M)Q4 2024~$(35) $(2.755) Beat
Total Revenue ($M)Q1 2025—~$200 New
Revenue from Fees ($M)Q1 2025—~$185 New
Net Interest Income ($M)Q1 2025—~$15 New
Contribution Margin (%)Q1 2025—~57% New
Adjusted EBITDA ($M)Q1 2025—~$27 New
GAAP Net Income ($M)Q1 2025—~$(20) New
Adjusted Net Income ($M)Q1 2025—~$16 New
Total Revenue ($M)FY 2025—~$1,000 New
Revenue from Fees ($M)FY 2025—~$920 New
Net Interest Income ($M)FY 2025—~$80 New
Adjusted EBITDA Margin (%)FY 2025—~18% New
GAAP Net IncomeFY 2025—At least breakeven New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI model innovationModel 18 with APR as model feature; automation at 91% (Q2) . Continued conversion gains (Q3) .Model 19 introduces Payment Transition Model; improved risk separation and calibration .Strengthening; sequential conversion/accuracy improvements.
Macro & UMIUMI declining; macro stabilizing (Q2) . CFO: macro steady in H2, modest rate cut lag effects (Q3) .CFO: NII ~+$20M as UMI falling and older vintages worked off .Improving; tailwind to NII/fair value marks.
Funding supplyShift to committed capital; added Centerbridge; prepared to overshoot capacity (Q2) . ABS recovery, oversubscription, spread tightening (Q3) .Expect >50% committed; pipeline strong; not assuming ABS rebound in guidance .Robust; diversified; capital not a gating factor.
Product performanceAuto/HELOC scaling; SDL breakeven (Q2) . Auto/HELOC originations rising; automation gains (Q3) .HELOC +60% seq; ~1,000 HELOCs, 0 defaults; auto refi conversion up ~7x in 2024; SDL +115% QoQ .Broad-based growth across products.
Servicing/collectionsInvestment in servicing; delinquency down; Autopay enrollment rising (Q2) . Efficiency improvements continue (Q3) .Personalized outreach improved 14-day payment by 25% QoQ; per-loan cost down 50% in 2024; roll rates down 15% YoY .Operational efficiency rising; competitive differentiator.
Strategic positioning & eventsT-Prime launched to serve super prime (Oct) .AI Day set for May 14, 2025 in NYC; “foundation model for credit” positioning .Expanding brand and investor engagement.

Management Commentary

  • CEO: “In Q4… delivered Adjusted EBITDA at levels not seen since the first quarter of 2022, and came within a whisker of returning to GAAP profitability” .
  • On Model 19/PTM: “PTM enables consideration of intermediate delinquency states… informs a more accurate model” .
  • CFO: “Net interest income was almost $20 million… as we’ve now mostly worked off underperforming older vintages and… falling UMI is increasingly reflected in improving fair value marks” .
  • Strategic priorities for 2025: “10x our leadership in AI… prepare our funding supply for rapid growth… return to GAAP net income profitability in the second half of the year” .

Q&A Highlights

  • Funding mix and capacity: Medium-term goal “north of 50%” committed capital; near-term growth via large counterparties; capital not a bottleneck in 2025 guidance .
  • Conversion drivers: Roughly “half” from model accuracy and “half” from UMI moderation/rate cuts working through pricing; APR reductions improve approvals .
  • Margin trajectory: Contribution margins steady (~58–62%); could lower take rates to invest in volume; expect positive operating leverage .
  • Balance sheet loans: Sequential rise from timing mismatch versus capital arrangements; objective to reduce loans held directly through 2025 .
  • Profitability cadence: Q1 2025 GAAP net loss (~$20M) but breakeven+ for FY 2025 as scale grows; stock comp accounting shift (one-year grants) raises reported SBC .

Estimates Context

  • S&P Global consensus estimates (EPS, revenue) for Q4 2024 were unavailable due to data retrieval limits at time of analysis. Given this constraint, comparisons to Street were not possible; however, the company materially beat its own Q3 guidance on revenue, margin, and profitability metrics .
  • Implication: Expect upward estimate revisions for FY 2025 on revenue ($~1B) and margin (18% Adjusted EBITDA), with Q1 seasonal softness embedded and H2 GAAP profitability targeted .

Key Takeaways for Investors

  • Conversion-driven growth is sustainable: successive model upgrades (M18/M19) and automation are driving higher approval rates and funnel efficiency without sacrificing calibration; expect continued CM resilience near ~60% .
  • Funding risk moderated: committed capital base, Blue Owl $2B program, and lender return target normalization reduce capital bottlenecks; capital strategy supports volume scale-up .
  • NII swing and fair value tailwinds: with UMI declining and older vintages behind, NII adds incremental upside to total revenue and earnings quality .
  • 2025 setup favorable: Q1 seasonality aside, FY revenue ~$1B and 18% Adjusted EBITDA margin imply operating leverage; management targeting GAAP profitability in H2 .
  • Product breadth matters: HELOC, auto, and SDL are scaling quickly and enhancing data/training, cross-sell, and conversion—broadening growth drivers beyond core PL .
  • Watch margin/volume trade-offs: management may dial down take rates to accelerate volume; monitor CM trajectory (~58–62%) and acquisition spend efficiency .
  • Near-term trading: Expect positive sentiment from beats and FY25 guide; focus on AI Day (May 14) as narrative catalyst around technology leadership and funding durability .