Upstart Holdings, Inc. · NASDAQ:UPST
Upstart — Q3 2024 Earnings Presentation
34 slides from Upstart's earnings presentation, Nov 7, 2024
Slide 1: Q3 2024 Earnings
Q3 2024 Earnings November 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 3M+ $40B+ 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: Q3'24 Summary
Q3’24 Summary Revenue Income from Operations Contribution Profit Margin Net Income Adjusted EBITDA $162.1M ($45.2M) 61% ($6.8M) $1.4M +20% y/y from ($43.8M) in Q3’23 vs 64% in Q3’23 from ($40.3M) in Q3’23 from $2.3M in Q3’23 Highlights 1 91% T-Prime 46% $2B 119% Of loans fully automated, Launched to
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 91% of loans are fully automated2 of instantly approved 92% borrowers convert to funded loans, 3.4X the conversion r
Slide 8: Expanding our footprint
Expanding our footprint Product, borrower, and funding diversification can drive growth and provide greater resilience through market cycles 100+ >50% T-Prime HELOC 1 2 1 Of funding comes from Super prime lending Now live in 34 states Banks and Credit committed capital and program launched with and D
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 1 September consumer trends September UMI 4.6% Personal savings rate 1.52 2 vs 4.8% in August CPI (Inflation) 4.0% vs 4.1% in August -1.3% M|M 62.7% Labor force p
Slide 11: Upstart loan performance
Upstart loan performance 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 9.5%2 Target cash flows Expected cash flows Over/under performance Upside/downsid
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 1.6% 4.1% 6.9% 9.3% 13.7% 5.0% Above a steadily increasing default rate from 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 $ 680B2 Personal $ 149B3 1 Total mortgage originations using data provided by TransUnion for Q2 2023 – Q1 2024 2 Total auto loans using data provided by TransUnion for Q2 2023 –
Slide 16: Financial Summary
Financial Summary
Slide 17: Q3'24 summary P&L and non-GAAP metrics
Q3’24 summary P&L and non-GAAP metrics (in millions, except ratios and per share data) Q3’24 Q2’24 Q|Q Q3’23 Y|Y Revenue $162.1 $127.6 27% $134.6 20% Revenue from Fees $167.6 $130.5 28% $146.8 14% Income (Loss) from Operations ($45.2) ($55.5) n/a ($43.8) n/a Net Income (Loss) ($6.8) ($54.5) n/a ($40
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) Q3’24 Q2’24 Q3’23 Cash and Restricted Cash $655.8 $560.6 $615.0 Loans, Notes, and Residuals $666.4 $832.3 $975.1 Total Assets $1,809.0 $1,820.2 $2,001.8 To
Slide 19: Loans Held on Balance Sheet
Loans Held on Balance Sheet Fair Value (in millions) Q3’24 Q2’24 Q3’23 Testing and Evaluation (R&D)1 $399 $396 $447 Auto $283 $294 $380 In Q3’23, we completed an asset-backed securitization and Other $116 $102 $67 retained the full residual equity, which required us to consolidate Core Personal $138
Slide 20: Committed Capital and Other Co-Investments
Committed Capital and Other Co-Investments (in millions) Q3’24 Q2’24 Q3’23 As of September 30, 2024: Capital co-invested1 $334 $236 $66 “Capital co-invested” is $334M and represents management's estimate of the cumulative monetary value of Upstart’s investments made in committed Current assessed val
Slide 21: Lending by Product
Lending by Product (in millions, except number of loans and ratios) Personal Unsecured Q3’24 Q2’24 Q|Q Q3’23 Y|Y Number of Loans 186,786 143,066 31% 113,252 65% Transaction Dollars $1,539 $1,084 42% $1,190 29% Auto Secured Q3’24 Q2’24 Q|Q Q3’23 Y|Y Number of Loans 1,080 708 53% 1,208 (11%) Transacti
Slide 22: Outlook
Outlook1 (in millions except for contribution margin) Q4’24 Revenue $180 Revenue From Fees $185 Net Interest Income (Loss) ($5) Contribution Margin2 59% Net Income (Loss) ($35) Non-GAAP Adjusted Net Income (Loss)2 ($5) Adjusted EBITDA2 $5 Diluted weighted average share count 91.7 1 Estimates are for
Slide 23: Financial Appendix
Financial Appendix
Slide 24: Financial Statements
Financial Statements (in thousands, except share and per share data) December 31, 2023 September 30, 2024 Assets Cash $ 368,405 $ 445,274 Restricted cash 99,382 210,493 Loans (at fair value) (1) 1,156,413 656,120 Property, equipment, and software, net 42,655 38,328 Operating lease right of use asset
Slide 25: Financial Statements
Financial Statements (in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2024 2023 2024 Revenue: Revenue from fees, net $ 146,755 $ 167,590 $ 407,585 $ 436,190 Interest income, interest expense, and fair value adjustments, net: Intere
Slide 26: Financial Statements
Financial Statements (in thousands) Nine Months Ended September 30, 2023 2024 Cash flows from operating activities Net loss $ (197,734) $ (125,826) Adjustments to reconcile net loss to net cash provided by operating activities: Change in fair value of loans 131,222 167,545 Change in fair value of ser
Slide 27: Financial Statements
Financial Statements (in thousands) Nine Months Ended September 30, 2023 2024 Cash flows from investing activities Purchases and originations of loans held-for-investment $ (121,294) $ (196,580) Proceeds from sale of loans held-for-investment 774 - Principal payments received for loans held-for-inves
Slide 28: Financial Statements
Financial Statements (in thousands) Nine Months Ended September 30, 2023 2024 Cash flows from financing activities Proceeds from warehouse borrowings $ 529,494 $ 297,587 Proceeds from convertible notes issuance, net of debt issuance costs paid to lender - 423,002 Payment of debt issuance costs to thir
Slide 29: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios) Three Months Ended September 30, Nine Months Ended September 30, 2023 2024 2023 2024 Revenue from fees, net $ 146,755 $ 167,590 $ 407,585 $ 436,190 Loss from operations (43,845) (45,152) (209,024) (168,106) Operating Margin (
Slide 30: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures (in thousands, except ratios) Three Months Ended September 30, Nine Months Ended September 30, 2023 2024 2023 2024 Total revenue $ 134,557 $ 162,140 $ 373,250 $ 417,564 Net loss (40,315) (6,758) (197,734) (125,826) Net Loss Margin (30%) (4%) (53%) (30%) A
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 September 30, Nine Months Ended September 30, 2023 2024 2023 2024 Net loss $ (40,315) $ (6,758) $ (197,734) $ (125,826) Adjusted to exclude the following: Stock-based compensation and ce
Slide 32: Key Operating Metrics
Key Operating Metrics Key Operating Metrics We review a number of operating metrics, including transaction volume, dollars; transaction volume, number of loans; conversion rate; and percentage of loans fully automated, to evaluate our business, measure our performance, identify trends affecting our b
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