Upstart's Q2 2025: Navigating Contradictions in ABS Market Health, Funding Strategies, and Economic Outlook

ABS market health and competitive pressure, transition to external funding, funding transition and capital strategy, economic cycle and growth expectations, and funding strategy and transition are the key contradictions discussed in Upstart's latest 2025Q2 earnings call.



Revenue Growth and Model Improvements:
- Upstart Holdings reported revenue of $257 million for Q2 2025, up 102% year-on-year.
- The growth was driven by advances in Model 22, which increased conversion rates from 19% in Q1 to 24% in Q2.

Expansion in Auto and Home Businesses:
- The Auto business grew 87% sequentially, while the Home business grew 67% sequentially in Q2.
- This growth was supported by the launch of the Upstart Auto Retail product and instant property verification in Home, both driven by AI advancements.

Shift in Product Mix and Loan Sizes:
- The percentage of super prime loans declined slightly quarter-over-quarter, with small dollar loans growing 40% sequentially.
- This trend reflects rapid growth in the small dollar product, which drives new users and cross-selling opportunities.

Improved Operating Performance:
- Upstart achieved positive GAAP net income for the first time since Q2 2022, with an adjusted EBITDA of $53 million.
- This turnaround was due to strong sequential momentum from model launches, coupled with improved unit economics in the core personal loan business.