GICS Sector : Financial Services
Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States.Its platform aggregates consumer demand for loans and connects it to its network of the company's AI-enabled bank partners.The company was founded in 2012 and is headquartered in San Mateo, California. Show Full description
Upstart's Q4 financial performance was impressive, with total revenue reaching $296 million, up 35% year-over-year and 7% sequentially. Revenue from fees was approximately $265 million, up 33% year-over-year, driven by strong product market fit in new products. The company's net income was around $19 million, ahead of expectations, reflecting outperformance on the top line and continued discipline across the cost structure. Adjusted EBITDA was roughly $64 million, in line with expectations. The actual EPS came out at $0.46, slightly lower than estimates at $0.47.
Publication Date: Feb -12
The company's revenue growth was driven by a 52% year-over-year increase in total loan origination dollars in Q4, with strong performance in new products. The average return of the last 12 quarterly vintages of loans exceeded that of U.S. treasuries by 608 basis points. The contribution margin came in at 53% in Q4, down 4 percentage points from the prior quarter, primarily due to the increased weighting of lifetime value in pricing calculations.
Analysts estimate next year's revenue growth at 20.9%. To understand what's priced in, we can look at valuation metrics. The current P/S Ratio is 3.08, and the EV/EBITDA is 35.11. The ROE is 7.29%, and the ROIC is 5.24%. These metrics suggest that the market has high expectations for Upstart's future growth. As Paul Gu mentioned, "We're building a bigger business by offering more value to customers and gaining a larger share of the market." This strategy is expected to drive future growth.
For 2026, Upstart is anticipating total revenues of approximately $1.4 billion, revenue from fees of approximately $1.3 billion, and an adjusted EBITDA margin of approximately 21%. The company aims to maintain a relatively steady growth clip over the coming several years, paired with improving margins and operating leverage. With a target compound annual growth rate of 35% from 2025 to 2028, Upstart is poised for continued success.
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Upstart Holdings, Inc.'s growth is driven by its innovative lending model, which leverages AI to assess creditworthiness, offering competitive interest rates and origination fees. This approach attracts a large customer base, fueling growth in the personal loan market.
Upstart Holdings' growth is driven by increasing demand for AI-powered lending, expansion into new markets, and strategic partnerships. The company's interest income from lending activities and fair value adjustments on investments contribute to its revenue growth.
Upstart offers personal loans ranging from $1,000 to $50,000 with fixed interest rates and repayment terms of 3 or 5 years.
Upstart offers credit cards with no annual fee, cashback rewards, and credit-building benefits.
Upstart provides auto loans for new and used vehicles, with competitive rates and flexible repayment terms.
Upstart offers small business loans with flexible repayment terms and competitive interest rates.
Upstart Holdings, Inc. operates in the fintech industry, which is characterized by a moderate threat of substitutes. While there are alternative lending platforms, Upstart's AI-powered lending model and focus on prime borrowers differentiate it from competitors.
Upstart's customers are primarily individual borrowers, who have limited bargaining power. The company's platform is designed to provide personalized loan offers, making it difficult for customers to negotiate prices.
Upstart's suppliers are primarily banks and investors that provide capital for lending. The company's platform is designed to attract multiple suppliers, reducing their bargaining power.
The fintech industry is characterized by a moderate threat of new entrants. While there are barriers to entry, such as regulatory compliance and capital requirements, new entrants can still disrupt the market.
The fintech industry is highly competitive, with multiple players competing for market share. Upstart faces intense rivalry from established players and new entrants, which can lead to pricing pressure and increased marketing expenses.
| Value | |
|---|---|
| Debt Weight | 65.32% |
| Debt Cost | 3.95% |
| Equity Weight | 34.68% |
| Equity Cost | 13.95% |
| WACC | 7.41% |
| Leverage | 188.38% |
Value: 9.5
Growth: 3.3
Quality: 6.2
Yield: 0.0
Momentum: 8.5
Volatility: 2.3
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Value: 9.3
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Value: 9.6
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Value: 7.3
Growth: 5.0
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Volatility: 3.7
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Value: 6.7
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Value: 2.6
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Volatility: 1.0
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