Upstart Holdings, Inc. · NASDAQ:UPST
Upstart — Q2 2024 Earnings Presentation
34 slides from Upstart's earnings presentation, Aug 6, 2024
Slide 1: Q2 2024 Earnings
Q2 2024 Earnings August 6, 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 $39B 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: Q2'24 Summary
Q2’24 Summary Revenue Income from Operations Contribution Profit Margin Net Income Adjusted EBITDA $127.6M ($55.5M) 58% ($54.5M) ($9.3M) -6% y/y from ($33.3M) in Q2’23 vs 67% in Q2’23 from ($28.2M) in Q2’23 from $11.0 in Q2’23 Highlights 1 2 91% 57% Best Company 30% HELOC Of loans fully automated, Gr
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 82 Net promoter score Borrowers love Upstart with 45K+ rating us ‘Excellent’ on Trustpilot1 91% of loans are instantly approved and fully automated2 >90% of instantly approved borrowers fund their loan, over
Slide 8: Expanding our footprint
Expanding our footprint Product, borrower, and funding diversification can drive growth and provide greater resilience through market cycles Auto Servicing 100+ >50% HELOC 1 1 Improvements Now live in: Of institutional funding 33% reduction in roll AL, AR, AZ, CO, CT, IA, ID, Banks and Credit comes f
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 June consumer trends June UMI 3.4% Personal savings rate* 1.49 1 2 vs 3.5% in May CPI (Inflation)* 4.2% vs 4.3% in May 1 -6.3 M|M 62.6% Labor force participation
Slide 11: Upstart loan performance
Upstart loan performance Most recent vintages are now expected to deliver ~14% gross returns1 If an investor invested equally in all Upstart cohorts, they would now expect inline annualized returns against a blended target of 9.3%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 1.2% 3.4% 6.0% 8.4% 12.9% 4.7% Upstart’s risk grades predict Above a steadily increasing default rate from 680 to left to right as the borrow
Slide 15: Upstart's marketplace
Upstart’s marketplace Total addressable market of $3T in annual loan originations $ Home $ 1.4T1 Small Business 895B4 Auto $ 686B2 Personal $ 145B3 1 Total mortgage originations using data provided by TransUnion for Q1 2023 – Q4 2023 2 Total auto loans using data provided by TransUnion for Q1 2023 –
Slide 16: Financial Summary
Financial Summary
Slide 17: Q2'24 summary P&L and non-GAAP metrics
Q2’24 summary P&L and non-GAAP metrics (in millions, except ratios and per share data) Q2’24 Q1’24 Q|Q Q2’23 Y|Y Revenue $127.6 $127.8 0% $135.8 (6%) Revenue from Fees $130.5 $138.1 (5%) $143.7 (9%) Income (Loss) from Operations ($55.5) ($67.5) n/a ($33.3) n/a Net Income (Loss) ($54.5) ($64.6) 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) Q2’24 Q1’24 Q2’23 Cash and Restricted Cash $560.6 $439.2 $509.9 Loans, Notes, and Residuals $832.3 $1,094.2 $841.5 Total Assets $1,820.2 $1,927.7 $1,763.7
Slide 19: Loans Held on Balance Sheet
Loans Held on Balance Sheet Fair Value (in millions) Q2’24 Q1’24 Q2’23 Testing and Evaluation (R&D)1 $396 $394 $493 Auto $294 $316 $413 In Q3’23, we completed an asset-backed securitization and Other $102 $78 $80 retained the full residual equity, which required us to consolidate Core Personal $290
Slide 20: Committed Capital and Other Co-Investments
Committed Capital and Other Co-Investments (in millions) Q2’24 Q1’24 Q2’23 “Capital co-invested” is $236M as of June 30, 2024, and represents management's estimate Capital co-invested 1 $236 $161 $40 of the cumulative monetary value of Upstart’s investments made in committed capital and other co-inv
Slide 21: Lending by Product
Lending by Product (in millions, except number of loans and ratios) Personal Unsecured Q2’24 Q1’24 Q|Q Q2’23 Y|Y Number of Loans 143,066 118,743 20% 106,919 34% Transaction Dollars $1,084 $1,111 (2%) $1,120 (3%) Auto Secured Q2’24 Q1’24 Q|Q Q2’23 Y|Y Number of Loans 708 526 35% 2,528 (72%) Transacti
Slide 22: Outlook
Outlook Q3’24 Revenue approximately $150 million Revenue From Fees approximately $155 million Net Interest Income (Loss) approximately ($5) million Contribution Margin approximately 57% Net Income (Loss) approximately ($49) million Non-GAAP Adjusted Net Income (Loss)1 approximately ($14) million Adj
Slide 23: Financial Appendix
Financial Appendix
Slide 24: Financial Statements
Financial Statements (in thousands, except share and per share data) December 31, 2023 June 30, 2024 Assets Cash $ 368,405 $ 374,791 Restricted cash 99,382 185,827 Loans (at fair value) (1) 1,156,413 820,628 Property, equipment, and software, net 42,655 39,728 Operating lease right of use assets 54,
Slide 25: Financial Statements
Financial Statements (in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2024 2023 2024 Revenue: Revenue from fees, net $ 143,689 $ 130,532 $ 260,830 $ 268,600 Interest income, interest expense, and fair value adjustments, net: Interest income (
Slide 26: Financial Statements
Financial Statements (in thousands, except share and per share data) Six Months Ended June 30, 2023 2024 Cash flows from operating activities Net loss $ (157,419) $ (119,068) Adjustments to reconcile net loss to net cash provided by operating activities: Change in fair value of loans 90,341 103,778 C
Slide 27: Financial Statements
Financial Statements (in thousands, except share and per share data) Six Months Ended June 30, 2023 2024 Cash flows from investing activities Purchases and originations of loans held-for-investment $ (83,868) $ (110,941) Principal payments received for loans held-for-investment 50,427 60,207 Principa
Slide 28: Financial Statements
Financial Statements (in thousands, except share and per share data) Six Months Ended June 30, 2023 2024 Cash flows from financing activities Proceeds from borrowings $ 340,370 $ 247,510 Repayments of borrowings (397,644) (154,999) Principal payments made on securitization notes - (28,446) Payable to
Slide 29: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios) Three Months Ended June 30, Six Months Ended June 30, 2023 2024 2023 2024 Revenue from fees, net $ 143,689 $ 130,532 $ 260,830 $ 268,600 Loss from operations (33,344) (55,486) (165,179) (122,954) Operating Margin (23%) (43%)
Slide 30: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios) Three Months Ended June 30, Six Months Ended June 30, 2023 2024 2023 2024 Total revenue $ 135,766 $ 127,630 $ 238,693 $ 255,424 Net loss (28,165) (54,470) (157,419) (119,068) Net Loss Margin (21%) (43%) (66%) (47%) Adjusted t
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 June 30, Six Months Ended June 30, 2023 2024 2023 2024 Net loss $ (28,165) $ (54,470) $ (157,419) $ (119,068) Adjusted to exclude the following: Stock-based compensation and certain payr
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