Upstart: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Nov. 3, 2026, Upstart (NASDAQ:UPST) announced that full-year fee revenue will reach $1.32 billion, topping initial expectations despite rising macroeconomic headwinds. For long-term investors, the company's ability to drive loan volume through machine-learning underwriting models matters far more than short-term balance sheet revaluations. Three things management said on the call stand out.

1. Automation Is Driving Secured Product Profitability

Upstart expanded margins in its collateral-backed loans by automating underwriting and reducing manual review expenses. Higher automation accelerates loan processing and lowers variable operating costs. This pushed the secured business to positive contribution profit -- fee revenue minus variable acquisition and servicing costs -- a full quarter ahead of schedule.

In home, nearly 40% of funded loans were fully automated with no human intervention by Upstart, up from less than 5% a year ago.
-- Paul Gu, Co-Founder and Chief Executive Officer

2. Upstart Bank Will Shift Funding to Deposits

The company is preparing to launch Upstart Bank, its planned banking subsidiary, in early 2027 to replace high-cost warehouse borrowing with low-cost customer deposits. Moving existing balance sheet loans into the bank will release trapped equity capital as cash while improving overall take rates, which measure net fees earned as a percentage of total originations.

We have agreements with 2 major partners, giving us the ability to raise ample deposits shortly after the bank launches. Using deposit funding, Upstart Bank will buy most of the existing loan book and begin funding new originations on our network.
-- Andrea Blankmeyer, Chief Financial Officer

3. Third-Party Partners Are Absorbing Loan Volume

Upstart is reducing its balance sheet risk by shifting loan originations toward multiyear committed funding partnerships. Lowering equity capital requirements insulates the platform from macroeconomic volatility while maintaining credit expansion across core lending categories.

Total equity capital used represented 9% of our total platform loan balance outstanding in Q3, down from 11.6% a year ago.
-- Andrea Blankmeyer, Chief Financial Officer

Looking Ahead

Upstart faces credit headwinds from the Upstart Macro Index (UMI) -- its proprietary metric tracking macro-driven borrower default risk -- which reached 1.53, above the average in October. However, core technology enhancements continue to widen model accuracy over traditional credit scoring benchmarks, sustaining origination expansion across market cycles.

Management is tracking pricing discipline, cost of capital, and loan automation rates to secure multiyear operating leverage.

On a full year basis, it is remarkable, frankly, that despite the 14-point increase in UMI and over 115 basis point increase in interest rates, we still expect to generate more fee revenue and profits from new originations than we expected at the start of this year.
-- Paul Gu, Co-Founder and Chief Executive Officer

The long-term thesis rests on converting technical differentiation into operating profits as deposit funding opens up lower capital costs and broader market reach.

Keep compounding that, and I believe no matter what, Upstart becomes an extremely large and profitable company.
-- Paul Gu, Co-Founder and Chief Executive Officer

The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.