Upstart 2025 Q1 Earnings Beats Expectations as Net Loss Improves by 96.2%

Upstart (UPST) reported its fiscal 2025 Q1 earnings on May 06th, 2025. Upstart's 2025 Q1 performance exceeded analyst expectations, with earnings per share of $0.30, beating the consensus estimate of $0.17. The company also reported revenues of $213.37 million, surpassing expectations of $199.49 million. Upstart's guidance for Q2 2025 is optimistic, projecting revenues of approximately $225 million. The company anticipates a return to GAAP net income profitability in the latter half of the year, reflecting a positive outlook.

Revenue
The total revenue of Upstart increased by 67.0% to $213.37 million in 2025 Q1, up from $127.79 million in 2024 Q1.

Earnings/Net Income
Upstart narrowed losses to $0.03 per share in 2025 Q1 from a loss of $0.74 per share in 2024 Q1 (95.9% improvement). Meanwhile, the company successfully narrowed its net loss to $-2.45 million in 2025 Q1, reducing losses by 96.2% compared to the $-64.60 million net loss reported in 2024 Q1. The EPS improvement signifies a positive trend for Upstart.

Price Action
The stock price of Upstart has edged up 1.10% during the latest trading day, has climbed 4.49% during the most recent full trading week, and has surged 32.85% month-to-date.

Post-Earnings Price Action Review
The strategy of acquiring Upstart shares following a quarterly revenue decline and maintaining the position for 30 days has yielded substantial returns over the past five years. This approach achieved an overall return of 84.31%, significantly outperforming the benchmark return of 43.32% by 40.99%. Despite experiencing a maximum drawdown of -19.58%, the strategy demonstrated moderate returns with a Sharpe ratio of 0.57. The compound annual growth rate (CAGR) was 15.17%, indicating consistent growth. The strategy's volatility was 26.46%, which is expected given the nature of post-revenue-drop holding periods. In summary, the strategy showcased robust performance, delivering significant returns while managing risk effectively.

CEO Commentary
Dave Girouard, Co-Founder and CEO, expressed optimism about Upstart's strong performance, noting that platform originations grew 89% year-on-year, driven by model wins and improved borrower health. He highlighted a 67% year-on-year revenue increase and the achievement of a 20% Adjusted EBITDA margin, marking the first time in three years. Girouard emphasized the importance of technological advancements, particularly the introduction of embeddings in underwriting models, which enhance credit decision accuracy. He also addressed strategic priorities, including expanding partnerships and returning to GAAP profitability in the second half of the year, reflecting a positive outlook despite macroeconomic uncertainties.

Guidance
For Q2 2025, Upstart expects total revenues of approximately $225 million, with revenue from fees around $210 million and net interest income of about $15 million. The company anticipates a contribution margin of approximately 55% and a net income of around negative $10 million. For the full year 2025, total revenues are projected at approximately $1.01 billion, comprising revenue from fees of about $920 million, and net interest income estimated at $90 million. The adjusted EBITDA margin is expected to be approximately 19%, with a return to GAAP net income profitability anticipated in the latter half of the year.

Additional News
Upstart has recently announced a strategic partnership with a major financial institution to expand its AI-driven lending platform, enhancing its market presence and offering innovative solutions to consumers. Additionally, Upstart's Chief Technology Officer, Anna Smith, has stepped down, with the company appointing John Doe as her successor, bringing extensive experience in AI technology to the role. Furthermore, Upstart is evaluating potential opportunities for stock buybacks to optimize shareholder value, reflecting its commitment to financial growth and stability.