SAN MATEO, California–(BUSINESS WIRE)–Upstart Holdings, Inc. (NASDAQ: UPST), a leading artificial intelligence (AI) lending marketplace, today announced preliminary unaudited financial results for the second quarter ended June 30, 2022. Upstart also announced the end of its fiscal year in the second quarter. Business and financial results for 2022 will be released on Monday, August 8, 2022 after market close.

Second Quarter 2022 Preliminary Unaudited Financial Results:

• revenue is estimated at approximately $228 million, previously $295 to $305 million
• contribution margin expected to be approx. 47%, previously forecast approx. 45%
• net income (loss) is expected to be in the range of US$31 million to US$27 million, up from US$4 million to US$0 million

“Fears of inflation and recession have pushed interest rates higher, putting banks and capital markets on a cautious footing,” said Dave Girouard, co-founder and CEO of Upstart. “Our sales were negatively impacted by two factors in roughly equal measure. First, our market’s funding is constrained, largely due to macro concerns among lenders and capital market participants. Second, during the second quarter, we took action to convert loans into cash on our balance sheet, which negatively impacted our earnings given the rapidly rising interest rate environment.”

“During the second quarter, we improved our unit economics and positioned ourselves for continued positive cash flow even at lower origination levels. With a low fixed cost basis, we expect to continue to add to our nearly $800 million unconstrained cash balance and continue to buy back Upstart stock when it makes sense. Finally, despite restricting recruitment to critical areas, we continue to invest in our models and products and are confident that Upstart will emerge a stronger company from this cycle.”

Upstart CFO Sanjay Datta said: “Despite the turbulent economic climate, Upstart-based loans have performed exceptionally well. For loans brokered through our platform and held by our more than 60 banking and credit union partners, average returns have consistently met or exceeded expectations since the program began in 2018.”

“For loans purchased by non-bank institutions, all 2018-2020 vintages delivered significant excess returns, while our 2021 is within 100 basis points of our loss expectations. Finally, we believe our models are well matched to economic conditions and are currently targeting returns in excess of 10 percent.”

Telephone conference:

Upstart will host a conference call and live webcast on August 8, 2022 at 1:30 p.m. PT / 4:30 p.m. ET. Prior to the conference call, the press release on the second quarter 2022 results, which includes the final financial results and an investor presentation, will be available on Upstart’s Investor Relations website at ir.upstart.com.

live webcast. The live webcast will be available on Upstart’s investor relations website, ir.upstart.com, and an archived webcast of the conference call will be available after the conference call.

Conference call dial-in. To access the live conference call in the United States and Canada: +1 800-289-0720, conference code 2205299. To access the live conference call outside of the United States and Canada: +1 313-209-5140, conference code 2205299.

Advice on disclosure of financial data

Upstart has not yet completed its reporting process for its second quarter 2022 ended June 30, 2022. The preliminary results presented herein are approximate, based on its reasonable estimates and the information available to it at the time and due to their preliminary nature. In certain instances, Upstart has presented ranges rather than specific amounts. As a result, Upstart’s actual results could differ materially from the preliminary results presented herein and will not be final until Upstart reports its final results for its second quarter of 2022 after completing its normal quarter-end accounting processes, including performing its internal controls over financial reporting . In addition, statements regarding Upstart’s estimated financial performance for the second quarter of 2022 do not provide all of the information necessary for an understanding of Upstart’s financial condition and results of operations as of and for the quarter ended June 30, 2022.

About upstart

Upstart is a leading AI lending marketplace working with banks and credit unions to expand access to affordable credit. Leveraging Upstart’s AI platform, Upstart-powered banks and credit unions can achieve higher approval rates and lower loss rates for every race, ethnicity, age and gender while delivering the exceptional digital-first lending experience their customers demand. More than two-thirds of Upstart loans are approved instantly and are fully automated. Founded in 2012 by ex-Googlers, Upstart is based in San Mateo, California and Columbus, Ohio.

Forward-Looking Statements

This press release contains forward-looking statements. You can identify forward-looking statements by the fact that they do not relate exclusively to historical or current facts. These statements may contain words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “aim”, “aim”, “believe”, “may”, “will”. , “should,” “will,” “could,” “may,” “likely,” and other words and phrases of similar import in connection with discussions of the timing or nature of future operational or financial performance or other events. Forward-looking statements reflect our current expectations and projections regarding our financial condition; macroeconomic factors; Plans; Goals; product development; growth opportunities; assumptions; risks; future performance; default rates on loans; Business; all investments; and operating results, including revenue, contribution margin, and net income (loss). Neither we nor any other person assume responsibility for the accuracy or completeness of these forward-looking statements. The forward-looking statements contained in this press release speak only as of the date of this release. Upstart undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. For more information about factors that could affect our results of operations, risks and uncertainties, please see our public filings with the Securities and Exchange Commission, copies of which are available on our Investor Relations website at www.upstart.com or on the SEC’s website are available at www.sec.gov. These risks and uncertainties include, among other things, our ability to sustain our growth rates; the effectiveness of our credit decision models and risk management efforts; macroeconomic conditions, particularly interest rates; geopolitical events such as the Russia-Ukraine conflict; disruptions in credit markets; our ability to retain existing banking partners and lenders and attract new ones; and our ability to thrive in a highly regulated industry.

About Non-GAAP Financial Measures

In addition to our results, which are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), we believe the non-GAAP measure of contribution margin is useful in evaluating our operational performance.

We believe non-GAAP information is useful in evaluating results of operations, ongoing operations, and for internal planning and forecasting purposes. We also believe that non-GAAP financial measures provide consistency and comparability with historical financial results and help investors compare Upstart to other companies, some of which use similar non-GAAP financial measures to supplement their GAAP results. Non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may differ from similarly titled non-GAAP financial measures used by other companies.

Reconciliation tables of the most comparable GAAP financial measures with the non-GAAP financial measures used in this press release are provided below.

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1. Borrower acquisition costs are expected to be 36% of net fee income for the three months ended June 30, 2022. Borrower acquisition costs consist of our sales and marketing expenses adjusted for costs not directly attributable to acquiring a new borrower, such as payroll costs for our business development and marketing teams and other operational, brand awareness and marketing activities.

2. Borrower verification and maintenance expenses are expected to be 17% of fee income, net for the three months ended June 30, 2022. Borrower verification and maintenance expenses consist of payroll and other staff-related expenses for staff associated with admission, Review and verification of credit deals is maintenance as well as maintenance system costs. Excludes payroll, staff and stock-based compensation for certain members of our client operations team whose work is not directly attributable to loan onboarding and administration.