Upstart Holdings (UPST) Warns for Q2

Upstart Holdings, Inc. (NASDAQ: UPST) announced preliminary unaudited financial results for the second quarter ending June 30, 2022. Upstart also announced that its final second quarter fiscal year 2022 business and financial results will be released on Monday, August 8, 2022 after the market close

Second Quarter 2022 Preliminary Unaudited Financial Results:

• Revenue is expected to be approximately $228 million, previously guided at $295 to $305 million
• Contribution margin is expected to be approximately 47%, previously guided at approximately 45%
• Net Income (loss) is expected to be in the range of ($31)-($27) million, previously guided at ($4) to $0 million

“Inflation and recession fears have driven interest rates up and put banks and capital markets on cautious footing,” said Dave Girouard, co-founder and CEO of Upstart. “Our revenue was negatively impacted by two factors approximately equally. First, our marketplace is funding constrained, largely driven by concerns about the macroeconomy among lenders and capital market participants. Second, in Q2, we took action to convert loans on our balance sheet into cash, which, given the quickly increasing rate environment, negatively impacted our revenue.”

“During the second quarter, we improved our unit economics and oriented ourselves toward continued positive cash flow even at lower loan origination volumes. With a low fixed cost base, we expect to continue adding to our almost $800 million unrestricted cash balance as well as to continue repurchasing Upstart shares as it makes sense. And finally, despite limiting hiring to critical areas, we continue to invest in our models and products and are confident Upstart will emerge from this cycle a stronger company.”

Sanjay Datta, CFO of Upstart, said "Despite the tumultuous economy, Upstart-powered loans have performed exceptionally well. For loans facilitated through our platform and held by our more than 60 bank and credit union partners, average returns have consistently met or exceeded expectations since the program’s inception in 2018."

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

Conference Call:

Upstart will host a conference call and live webcast August 8th, 2022 at 1:30 p.m. PT / 4:30 p.m. ET. Prior to the conference call, the second quarter 2022 earnings press release with 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 accessible 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.

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