Upstart Holdings Reports $128.6 Million Net Loss and 13% Revenue Growth in 2024

Upstart Holdings, Inc. reported a net loss of $128.6 million for the year ended December 31, 2024, compared to a net loss of $240.1 million in 2023. Revenue from fees, net, increased by 13% to $635.5 million in 2024, driven by an 88.3 million increase in platform and referral fees, partially offset by a $13.3 million decrease in servicing and other fees. Transaction Volume, Dollars increased 28% to $5.9 billion, while Transaction Volume, Number of Loans increased 59% to 697,092. The company's Conversion Rate rose to 16.5% in 2024 from 9.7% in 2023, and the Percentage of Loans Fully Automated reached 91%, up from 87% the previous year.

Significant changes compared to the prior year include a decrease in unfavorable fair value adjustments, net, of $36.1 million, and an increase in interest income of $17.4 million. Operating expenses also saw shifts, with sales and marketing expenses increasing by 31%, customer operations expenses increasing by 5%, engineering and product development expenses decreasing by 9%, and general, administrative, and other expenses increasing by 9%. The company's Adjusted EBITDA improved to $10.6 million in 2024 from a loss of $17.2 million in 2023. The company's top three lending partners originated 82% of the loans facilitated through its marketplace in 2024, accounting for 63% of total revenue.

During 2024, Upstart issued $431.3 million in 2.00% convertible senior notes due 2029 and $500.0 million in 1.00% convertible senior notes due 2030. A portion of the proceeds from the 2029 notes were used to repurchase a portion of outstanding 2026 notes, resulting in a gain on debt extinguishment of $33.4 million. The company also implemented additional workforce reductions resulting in a 13% decrease in headcount, incurring $4.4 million in reorganization expenses. As of December 31, 2024, Upstart had 1,193 full-time employees.

Key operational developments included the launch of new credit products, including small dollar loans and HELOCs. The company's Upstart Macro Index (UMI), introduced in 2023, was measured at approximately 1.40 as of December 31, 2024. The company also noted that it held $703.4 million of loans on its balance sheet as of December 31, 2024, excluding loans held in consolidated securitization. The company's maximum exposure to losses under committed capital and other co-investment arrangements was approximately $459.3 million as of December 31, 2024.

Upstart's outlook includes continued efforts to expand lending partnerships, secure additional capital, and improve its AI models. The company anticipates that the Percentage of Loans Fully Automated will level off and remain relatively stable in the long term, but may fluctuate depending on the loan offering mix. The company does not expect to pay dividends in the foreseeable future. The company also highlighted several risk factors, including those related to macroeconomic conditions, loan funding, AI model effectiveness, regulatory changes, and competition.