Upstart Holdings, Inc. · NASDAQ:UPST
Upstart — Q1 2024 Earnings Presentation
34 slides from Upstart's earnings presentation, May 7, 2024
Slide 1: Q1 2024 Earnings
Q1 2024 Earnings May 7, 2024
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements, other than statements of historical fact contained in this presentati
Slide 3: Upstart is the leading AI lending marketplace
Upstart is the leading AI lending marketplace 3.0M $38B 100+ 1 1 1 Customers Originations Banks We connect millions of customers to 100+ banks and credit unions who leverage Upstart’s artificial intelligence (AI) models and cloud applications to deliver superior credit products. With Upstart AI, lend
Slide 4: Q1'24 Summary
Q1’24 Summary Revenue Income from Operations Contribution Profit Margin Net Income Adjusted EBITDA $127.8M ($67.5M) 59% ($64.6M) ($20.3M) +24% y/y from ($131.8M) in Q1’23 vs 58% in Q1’23 from ($129.3M) in Q1’23 from ($31.1M) in Q1’23 Highlights 1 90% RCP 103 +80% HELOC Announced Recognized Of loans f
Slide 5: Key Investment Areas
1 Best rates for all Key Investment Areas 2 More efficient borrowing and lending 3 Expanding our footprint
Slide 6: Best rates for all
Best rates for all AI provides superior risk separation, leading to higher approvals and lower APRs Upstart's model is more accurate than traditional lending models; allowing lenders to Powered by more than 1,600 variables, Upstart 1 approve more applicants at lower APRs. models are trained on more
Slide 7: More efficient borrowing and lending
More efficient borrowing and lending Enabled by better AI and more sophisticated risk models 83 Net promoter score Borrowers love Upstart with 45K+ rating us ‘Excellent’ on Trustpilot1 90% of loans are instantly approved and fully automated2 91% of instantly approved borrowers fund their loan, over 3
Slide 8: Expanding our footprint
Expanding our footprint Product, borrower, and funding diversification can drive growth and provide greater resilience through market cycles 100+ ~$2.7B Auto Secured HELOC 1 1 Personal Loans expected funding through committed Now live in: Banks and Credit Launched ASPL pilot in FL, CO, MI, WA, UT, ca
Slide 9: Consumer and Credit Trends
Consumer and Credit Trends
Slide 10: UMI and consumer trends
UMI and consumer trends Macroeconomic risk to consumer credit is holding steady reflecting the pause in the recovery of key consumer trends March consumer trends March UMI 3.2% Personal savings rate* 1.60 1 2 vs 3.6% in February 4.5% CPI (Inflation)* 1 vs 4.4% in February -1.8 M|M 62.7% Labor force pa
Slide 11: Upstart loan performance
Upstart loan performance Most recent vintages are now expected to deliver ~13% gross returns1 If an investor invested equally in all Upstart cohorts, they would now expect inline annualized returns against a blended target of 9.1%2 Target cash flows Expected cash flows Over/under performance Upside/do
Slide 12: Impact and Scale
Impact and Scale
Slide 13: Upstart's impact
Upstart’s impact Dedicated to expanding access to credit for all “Money is a fundamental ingredient of life, and unless you’re one of the few percent of Americans with significant wealth, the price and difficulty of borrowing affects you every day. Throughout history, affordable credit has been centra
Slide 14: Upstart risk separation
Upstart risk separation Significantly better at differentiating risk than credit scores Annualized default rates1 Upstart Risk Grades A+ B C D E- Average 700 or Upstart’s risk grades predict 1.2% 3.5% 6.2% 8.6% 13.2% 4.6% a steadily increasing default rate from Above left to right as the borrowers get
Slide 15: Upstart's marketplace
Upstart’s marketplace Total addressable market of $3T in annual loan originations $ Home $ 1.4T1 Small Business 895B4 Auto $ 691B2 Personal $ 148B3 1 Total mortgage originations using data provided by TransUnion for Q4 2022 – Q3 2023 2 Total auto loans using data provided by TransUnion for Q4 2022 –
Slide 16: Financial Summary
Financial Summary
Slide 17: Q1'24 summary P&L and non-GAAP metrics
Q1’24 summary P&L and non-GAAP metrics (in millions, except ratios and per share data) Q1’24 Q4’23 Q|Q Q1’23 Y|Y Revenue $127.8 $140.3 (9%) $102.9 24% Revenue from Fees $138.1 $152.8 (10%) $117.1 18% Income (Loss) from Operations ($67.5) ($47.5) n/a ($131.8) n/a Net Income (Loss) ($64.6) ($42.4) n/a
Slide 18: Balance Sheet items and key operating metrics
Balance Sheet items and key operating metrics (in millions, except Transaction Volume (number of loans), % fully automated, and conversion rate) Q1’24 Q4’23 Q1’23 Cash and Restricted Cash $439.2 $467.8 $451.9 Loans, Notes, and Residuals $1,094.2 $1,171.3 $987.3 Total Assets $1,927.7 $2,017.1 $1,821.
Slide 19: Loans Held on Balance Sheet
Loans Held on Balance Sheet Fair Value (in millions) Q1’24 Q4’23 Q1’23 Testing and Evaluation (R&D)1 $394 $411 $493 Auto $316 $343 $401 In Q3’23, we completed an asset-backed securitization and Other $78 $68 $92 retained the full residual equity, which required us to consolidate Core Personal $530 $
Slide 20: Committed Capital and Other Co-Investments
Committed Capital and Other Co-Investments in millions Q1’24 Q4’23 Q1’23 As of March 31, Upstart has Capital co-invested $169.6 $98.5 - invested $169.6M linked to credit performance as part of our committed capital and other Current assessed value co-investments. $156.2 $95.0 - (undiscounted) The va
Slide 21: Lending by Product
Lending by Product Personal Unsecured Q1’24 Q4’23 Q|Q Q1’23 Y|Y Number of Loans 118,743 129,078 (8%) 82,070 45% Transaction Dollars $1,111M $1,238M (10%) $952 17% Auto Secured Q1’24 Q4’23 Q|Q Q1’23 Y|Y Number of Loans 526 542 (3%) 2,014 (74%) Transaction Dollars $13M $13M - $45 (71%) HELOC Q1’24 Q4’
Slide 22: Outlook
Outlook Q2’24 Revenue approximately $125 million Revenue From Fees approximately $135 million Net Interest Income (Loss) approximately ($10) million Contribution Margin approximately 56% Net Income (Loss) approximately ($75) million Non-GAAP Adjusted Net Income (Loss)1 approximately ($36) million Ad
Slide 23: Financial Appendix
Financial Appendix
Slide 24: Financial Statements
Financial Statements (in thousands, except share and per share data) December 31, 2023 March 31, 2024 Assets Cash $ 368,405 $ 300,529 Restricted cash 99,382 138,622 Loans (at fair value) (1) 1,156,413 1,080,865 Property, equipment, and software, net 42,655 40,555 Operating lease right of use assets
Slide 25: Financial Statements
Financial Statements (in thousands, except share and per share data) Three Months Ended March 31, 2023 2024 Revenue: Revenue from fees, net $ 117,141 $ 138,068 Interest income, interest expense, and fair value adjustments, net: Interest income (1) 45,315 51,171 Interest expense (1) (7,132) (10,714)
Slide 26: Financial Statements
Financial Statements (in thousands, except share and per share data) Three Months Ended March 31, 2023 2024 Cash flows from operating activities Net loss $ (129,254) $ (64,598) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Change in fair value of loans 54,9
Slide 27: Financial Statements
Financial Statements (in thousands, except share and per share data) Three Months Ended March 31, 2023 2024 Cash flows from investing activities Purchases and originations of loans held-for-investment $ (46,382) $ (46,152) Principal payments received for loans held-for-investment 24,422 27,242 Princi
Slide 28: Financial Statements
Financial Statements (in thousands, except share and per share data) Three Months Ended March 31, 2023 2024 Cash flows from financing activities Proceeds from borrowings $ 60,673 $ 74,260 Repayments of borrowings (46,962) (110,175) Principal payments made on securitization notes - (13,564) Proceeds fr
Slide 29: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios) Three Months Ended March 31, 2023 2024 Revenue from fees, net $ 117,141 $ 138,068 Loss from operations (131,835) (67,468) Operating Margin (113%) (49%) Sales and marketing, net of borrower acquisition costs (1) $ 11,726 $ 10,
Slide 30: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios) Three Months Ended March 31, 2023 2024 Total revenue $ 102,927 $ 127,794 Net loss (129,254) (64,598) Net Loss Margin (126%) (51%) Adjusted to exclude the following: Stock-based compensation and certain payroll tax expenses (1
Slide 31: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios, and per share data) Three Months Ended March 31, 2023 2024 Net loss $ (129,254) $ (64,598) Adjusted to exclude the following: Stock-based compensation and certain payroll tax expenses (1) 75,026 37,433 Reorganization expenses
Slide 32: Key Operating Metrics
Key Operating Metrics Key Operating Metrics We review a number of operating metrics, including transaction volume, $; transaction volume, number of loans; conversion rate; and percentage of loans fully automated, to evaluate our business, measure our performance, identify trends affecting our busines
Slide 33: Non-GAAP Financial Metrics
Non-GAAP Financial Metrics About Non-GAAP Financial Measures In addition to our results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), we believe the non-GAAP measures of contribution profit, contribution margin, adjusted EBITDA, adjusted EBITDA
Slide 34: Thank You
Thank You