Upstart's stock soars as fintech company's CEO says comeback is in the works

By Emily Bary

Upstart's earnings bring a better-than-expected forecast

After giving a better-than-expected forecast, Upstart Holdings Inc. sees its "comeback story" on the horizon.

Upstart's (UPST) outlook calls for revenue of about $150 million, along with a loss of $5 million on the basis of earnings before interest, taxes, depreciation and amortization. Analysts surveyed by FactSet were modeling $135 million in revenue and a $13 million loss on adjusted Ebitda for Upstart, which uses artificial intelligence in the lending process.

The financial-technology company expects to report positive adjusted Ebitda in the fourth quarter. Analysts model $1.2 million on the metric for that period.

Shares were up about 18% in Tuesday's extended session.

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"The guidance we released today demonstrates that we're on track toward resuming our role as the fintech known for high growth and healthy margins," Chief Executive Dave Girouard said in a release.

Upstart's business momentum reflects "significant advances in our AI model, a revitalized funding supply and increased operating efficiency," according to Girouard. "These wins and more are providing the foundation for the Upstart comeback story."

The company, which employs AI to power lending decisions, has in recent years seen demand weaken due to higher interest rates. Shares closed Tuesday down more than 90% from their 2021 highs.

For the second quarter, Upstart reported a net loss of $55 million, or 62 cents a share, compared with a loss of $28 million, or 34 cents a share, in the year-prior period. On an adjusted basis, Upstart lost 17 cents a share, while analysts tracked by FactSet were projecting 39 cents.

Revenue came in at $128 million in the second quarter, down 6% from a year before, though it was flat on a sequential basis. Analysts were modeling $125 million.

Upstart's revenue from fees amounted to $131 million, down 9% from a year before. Because of net interest losses, Upstart's revenue from fees can be higher than overall revenue.

The company anticipates that fee revenue will be about $320 million in the second half, while analysts were projecting about $300 million across the remaining two quarters of the year.

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-Emily Bary

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08-06-24 1629ET

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