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Upstart (UPST) beat Palantir's Rule of 40 score with 102% revenue growth and a 21% adjusted EBITDA margin, resulting in a score of 123. Despite its strong Q2 report, Upstart's stock fell due to a shrinking take rate. Investors should consider buying the dip, as Upstart's performance is impressive and the company raised its full-year forecast.

Upstart Holdings, Inc. (NASDAQ: UPST), the leading artificial intelligence (AI) lending marketplace, reported robust financial results for the second quarter of 2025. The company announced a significant 102% year-over-year (YoY) revenue growth, reaching $257 million, and an impressive 21% adjusted EBITDA margin, resulting in a Rule of 40 score of 123. Despite these impressive figures, Upstart's stock fell due to a shrinking take rate.

Key highlights from Upstart's Q2 2025 report include:
- Transaction Volume: 372,599 loans originated, up 159% YoY.
- Total Originations: Exceeded $2.8 billion, up 154% YoY.
- GAAP Income (Loss) from Operations: Improved to $4.5 million from a loss of ($55.5) million in Q2 2024.
- GAAP Net Income (Loss): Improved to $5.6 million from a loss of ($54.5) million in Q2 2024.
- Adjusted EBITDA: Improved to $53.1 million from a loss of ($9.3) million in Q2 2024.

Upstart's performance in Q2 2025 demonstrates its ability to leverage AI to drive growth and profitability. The company's strong revenue growth and improved EBITDA margin highlight its efficiency and effectiveness in the competitive lending market. However, the stock's decline can be attributed to a decrease in the take rate, which is a measure of the percentage of loans that are actually funded by lenders on the platform.

Investors should consider the long-term potential of Upstart's AI-driven lending platform. The company's ability to originate loans at a high rate and its strong financial performance indicate that it is well-positioned to continue growing. Additionally, the company's full-year forecast, which includes a 102% revenue growth and a 20% adjusted EBITDA margin, suggests that it is confident in its ability to maintain its strong performance.

In conclusion, while Upstart's stock fell due to a shrinking take rate, its impressive Q2 2025 performance and Rule of 40 score of 123 indicate that it is a strong performer in the AI lending market. Investors should carefully consider the company's long-term potential and its ability to continue growing and improving its financial performance.

References:
[1] https://ir.upstart.com/news-releases/news-release-details/upstart-announces-results-second-quarter-2025