Upstart's Business Surged Back in Q4

Source The Motley Fool

Here's our initial take on Upstart's (NASDAQ: UPST) fourth-quarter results.

Key Metrics

Metric Q4 FY23 Q4 FY24 Change vs. Expectations
Revenue $140 million $219 million +56% Beat
GAAP earnings per share (loss) ($0.50) ($0.03) n/a Beat
Adjusted EBITDA $0.6 million $38.8 million +6,164% n/a
Unit loan transaction volume 129,664 245,663 +90% n/a

Demand for loans is bouncing back, and the Upstart profit flywheel is ramping up

Upstart's business has whipsawed around the past few years as strong initial demand in a low-interest rate environment led to quick growth and then interest rates surging to multi-decade highs saw lenders pull back from the unsecured personal loans that make up the bulk of Upstart's business.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

There are some signs that the lending freeze is beginning to thaw and that Upstart is positioned to be a big winner from lenders' increasing trust in its risk assessment platform.

Revenue rocketed up 56% year over year in the fourth quarter on 68% more loan transactions, including solid growth both in small-dollar loans (between $250 and $2,500) and loans that are originated by Upstart's bank and credit union partners. Auto loan originations increased 61% sequentially, while HELOCs (home equity loans) increased 59%. There's also still significant room for growth in both categories, with only $70 million in originations in the quarter, against the backdrop of a $1.4 trillion home lending market, and $677 billion auto loan market.

It's not just exciting top-line growth, either. While still reporting a GAAP loss, Upstart's financial trends are extremely favorable. Its $2.8 million net loss in Q4 compares to a $42.4 million loss last year, and its operating loss shrank from $48 million to $4.8 million year over year. For the full year, Upstart shrank its operating loss by 33% and almost cut its GAAP loss in half.

Immediate Market Reaction

Upstart shares are rocketing higher in after-hours trading. At this writing, shares are trading up more than 25%, on both the results that smashed expectations, and full-year 2025 guidance that is definitively positive and further expectations-smashing.

What to Watch

Upstart gave us guidance for 2025 that says Q4 was not an outlier, but our most clear indication that lenders believe its credit risk assessment tools and platform deliver high-quality loans they can trust owning. Upstart added 28 banks and credit union partners in 2024, and it now has more than 100, as well as numerous existing investors who made $1.3 billion in new commitments to purchase and fund loans on the platform.

Upstart is calling for accelerating growth in 2025, with first-quarter revenue expected to grow 56%, and full-year revenue to reach $1 billion, up 57% from last year. It's also expecting to be "at least" break even on GAAP profitability, and to generate $180 million in adjusted EBITDA.

Lending will always be cyclical, with ebbs and flows based on interest rates and the broader economy, but we are beginning to see more of Upstart's potential as lenders put their money at risk on its platform.

Helpful Resources

  • Full earnings report
  • Investor relations page

Should you invest $1,000 in Upstart right now?

Before you buy stock in Upstart, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Upstart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $818,587!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

Learn more »

*Stock Advisor returns as of February 7, 2025

Jason Hall has positions in Upstart and has the following options: short January 2027 $32.50 puts on Upstart. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
What Crypto Whales are Buying For May 2025Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
Author  Beincrypto
Apr 21, Mon
Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
placeholder
Gold Price Forecast: XAU/USD attracts some sellers below $3,250 on firmer US DollarThe Gold price (XAU/USD) extends the decline to around $3,245 during the early Asian session on Thursday. The precious metal edges lower to near a two-week low amid easing US-China trade tensions and stronger US Dollar (USD) demand. 
Author  FXStreet
May 01, Thu
The Gold price (XAU/USD) extends the decline to around $3,245 during the early Asian session on Thursday. The precious metal edges lower to near a two-week low amid easing US-China trade tensions and stronger US Dollar (USD) demand. 
placeholder
Ripple Price Prediction: XRP signals breakout as spot ETF prospects brightenRipple (XRP) price remains firmly supported at $2.20, while trading at $2.22 at the time of writing on Friday.
Author  FXStreet
19 hours ago
Ripple (XRP) price remains firmly supported at $2.20, while trading at $2.22 at the time of writing on Friday.
placeholder
Gold looks set for weekly loss as news of trade talks curb haven demandGold (XAU/USD) trades around $3,250 on Friday,  recovering slightly from two-week lows after three straight days of losses. The losing streak that took place this week was the sum of a whole package of headlines that all had one theme in common: easing on tariffs. 
Author  FXStreet
19 hours ago
Gold (XAU/USD) trades around $3,250 on Friday,  recovering slightly from two-week lows after three straight days of losses. The losing streak that took place this week was the sum of a whole package of headlines that all had one theme in common: easing on tariffs. 
placeholder
Could XRP ETF Approval Be Near? Ripple To Meet SEC Chair Paul Atkins On May 2As positive shifts in cryptocurrency regulation unfold under President Donald Trump’s second administration, speculation is mounting regarding the potential approval of spot XRP ETF applications. 
Author  Bitcoinist
19 hours ago
As positive shifts in cryptocurrency regulation unfold under President Donald Trump’s second administration, speculation is mounting regarding the potential approval of spot XRP ETF applications. 
goTop
quote