Upstart (NASDAQ:UPST) Posts Quarterly Earnings Results, Misses Expectations By $0.03 EPS

Key Points

• Upstart missed earnings expectations, reporting $0.16 EPS versus the $0.19 consensus estimate, though revenue rose 41.9% year over year to $364.71 million, exceeding forecasts.
• Core personal-loan originations increased 27% sequentially, lifting total originations 23% to $4.2 billion. The company returned to GAAP profitability with about $17 million in net income and reiterated full-year guidance of approximately $1.4 billion in revenue and $294 million in adjusted EBITDA.
• Management cited a modest July slowdown, maintained its outlook, and plans to sunset auto refinancing. Analysts remain divided, with Upstart holding a consensus “Hold” rating and an average price target of $43.93.

Upstart (NASDAQ:UPST - Get Free Report) issued its earnings results on Tuesday. The company reported $0.16 EPS for the quarter, missing the consensus estimate of $0.19 by ($0.03), FiscalAI reports. Upstart had a net margin of 4.34% and a return on equity of 5.63%. The firm had revenue of $364.71 million during the quarter, compared to analyst estimates of $352.29 million. During the same quarter in the prior year, the business earned $0.36 earnings per share. The business's quarterly revenue was up 41.9% on a year-over-year basis.

Here are the key takeaways from Upstart's conference call:

• Core personal loan originations rose 27% sequentially, helping drive total originations up 23% to $4.2 billion. Unsecured contribution margin increased six percentage points to 62% as mix shifted toward higher-margin personal loans and customer acquisition efficiency improved.
• Secured products made substantial profitability progress, with contribution margin improving 61 percentage points sequentially to negative 35%; management expects auto and home to reach contribution-margin breakeven by Q4 2026. Auto originations rose 264% year over year and home originations increased 139%.
• Upstart returned to GAAP profitability, posting approximately $17 million of net income and $77 million of adjusted EBITDA, while reiterating full-year guidance of roughly $1.4 billion in revenue and $294 million in adjusted EBITDA. The company also secured up to $5 billion in new institutional funding capacity and received conditional OCC approval for its bank charter, targeted for launch in early 2027.
• The company said July originations showed a modest sequential slowdown, partly reflecting a higher UMI macroeconomic risk measure, which reached 1.5 at the end of Q2. Upstart also chose not to raise its full-year outlook and is sunsetting auto refinancing because its growth potential and velocity lagged other businesses.

Upstart Price Performance

Shares of UPST stock traded up $0.89 during trading hours on Tuesday, reaching $30.32. The company had a trading volume of 7,673,876 shares, compared to its average volume of 4,765,715. Upstart has a 12 month low of $23.97 and a 12 month high of $85.31. The business has a fifty day simple moving average of $31.32 and a 200-day simple moving average of $31.69. The company has a market cap of $2.90 billion, a price-to-earnings ratio of 79.79, a price-to-earnings-growth ratio of 0.73 and a beta of 2.29.

Analyst Upgrades and Downgrades

Several research analysts have issued reports on the company. Piper Sandler cut their price target on Upstart from $56.00 to $46.00 and set an "overweight" rating on the stock in a report on Wednesday, May 6th. Weiss Ratings downgraded Upstart from a "sell (d+)" rating to a "sell (d)" rating in a report on Wednesday, May 6th. Needham & Company LLC upped their target price on Upstart from $37.00 to $40.00 and gave the stock a "buy" rating in a research report on Tuesday, July 7th. Citigroup decreased their price target on shares of Upstart from $80.00 to $61.00 and set a "buy" rating for the company in a research note on Wednesday, July 22nd. Finally, Wall Street Zen downgraded shares of Upstart from a "hold" rating to a "sell" rating in a report on Saturday, June 27th. Eight equities research analysts have rated the stock with a Buy rating, seven have given a Hold rating and two have given a Sell rating to the stock. According to MarketBeat.com, Upstart presently has an average rating of "Hold" and a consensus target price of $43.93.

Insider Buying and Selling at Upstart

In other Upstart news, insider Sanjay Datta sold 15,000 shares of the firm's stock in a transaction on Tuesday, June 9th. The stock was sold at an average price of $30.41, for a total transaction of $456,150.00. Following the transaction, the insider directly owned 313,556 shares in the company, valued at approximately $9,535,237.96. This trade represents a 4.57% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, CFO Andrea Blankmeyer sold 7,044 shares of the company's stock in a transaction on Friday, May 15th. The stock was sold at an average price of $29.63, for a total transaction of $208,713.72. Following the completion of the sale, the chief financial officer owned 162,383 shares of the company's stock, valued at approximately $4,811,408.29. The trade was a 4.16% decrease in their position. The SEC filing for this sale provides additional information. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold a total of 33,346 shares of company stock valued at $991,672 in the last three months. Insiders own 17.29% of the company's stock.

Institutional Investors Weigh In On Upstart

Institutional investors and hedge funds have recently added to or reduced their stakes in the company. Orion Porfolio Solutions LLC purchased a new stake in shares of Upstart during the 2nd quarter valued at $217,000. Captrust Financial Advisors purchased a new position in shares of Upstart in the 2nd quarter worth about $216,000. Daiwa Securities Group Inc. grew its position in Upstart by 29.1% during the second quarter. Daiwa Securities Group Inc. now owns 1,068 shares of the company's stock valued at $69,000 after buying an additional 241 shares during the period. Acadian Asset Management LLC bought a new position in Upstart during the first quarter valued at about $208,000. Finally, NewEdge Advisors LLC grew its position in Upstart by 20.0% during the first quarter. NewEdge Advisors LLC now owns 1,997 shares of the company's stock valued at $92,000 after buying an additional 333 shares during the period. Hedge funds and other institutional investors own 63.01% of the company's stock.

Upstart Company Profile

Upstart Holdings, Inc operates a cloud-based lending marketplace that leverages artificial intelligence and machine learning to assess borrower creditworthiness. The company partners with banks and credit unions, providing its proprietary AI models and underwriting platform to facilitate consumer credit products. By focusing on non‐traditional data points—such as education, employment history and other real‐time indicators—Upstart seeks to improve approval rates and lower loss rates compared with conventional credit scoring methods.

Upstart's core offering centers on unsecured personal loans, which borrowers can use for purposes such as debt consolidation, home improvements or major purchases.

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