Key Takeaways:
Upstart Holdings reported Q2 revenue of $365 million, up 42% from a year earlier and beating the $362 million analysts expected.
"The AI model enhancements let us separate low-risk borrowers from high-risk ones more accurately," CEO Paul Gu said.
Adjusted EBITDA of $76.9 million rose 45% from a year earlier, topping the $64.4 million consensus tracked by FactSet. GAAP EPS of $0.16 missed by $0.03. The company facilitated roughly $1.4 billion in preliminary loan originations across 27.4 effective origination days, or about $51 million per day.
Shares rose 13% in after-hours trading. The company maintained its full-year outlook of $1.4 billion in revenue and $294 million in adjusted EBITDA, up 21% from the prior year.
Gu said the company spent the second quarter improving its AI lending models to better assess borrower risk, a process he described as using AI "to do something that humans were frankly never very good at doing" — underwriting and verifying loans. The improvements helped reaccelerate growth in personal loans, Upstart's most mature and profitable segment, while the company continues to build out its newer home and auto segments.
Upstart is also building a bank, having received preliminary approval from the U.S. Treasury Department's Office of the Comptroller of the Currency last month. "We think the opportunities in home and auto, and building the bank, are fairly enormous," Gu said.
Private-credit partners are a key piece of Upstart's funding equation, and Gu said the company has benefited as capital shifts toward lenders with strong credit performance. All of Upstart's private-credit partners have renewed their arrangements, "generally signing longer-term deals, bigger deals," he added.
Shares of Upstart have fallen 33% this year, though they had climbed nearly 10% in the five trading days before the report. The stock's after-hours gain extends a rebound that has lifted the AI lending platform off recent lows.
The beat signals that Upstart's AI-driven underwriting is translating into faster loan growth after a period of sluggish originations. Investors will watch whether the company can sustain the reacceleration through the second half, with the full-year guidance implying continued momentum in the core personal loan business.
This article is for informational purposes only and does not constitute investment advice.
