Upstart Holdings, Inc. (UPST) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial metrics, optimistic guidance, and strategic focus on AI and new product development. Despite some unclear management responses, the company's partnerships and market share growth are promising. The stable consumer environment, deliberate credit partnerships, and focus on long-term customer value are positive indicators. Given the market cap, these factors suggest a positive stock price movement.
Key Financial Performance
Revenue Total revenue for Q4 2025 was approximately $296 million, up 35% year-on-year and 7% sequentially. For the full year, total revenue grew by 64% to $1.04 billion. This growth was driven by significant market share gains in personal loans and rapid growth in newer products like auto and home loans.
Fee Revenue Fee revenue for Q4 2025 was approximately $265 million, up 33% year-on-year. For the full year, fee revenue reached $950 million, exceeding guidance. This was attributed to underwriting model improvements and higher origination volumes.
Net Income Net income for Q4 2025 was $19 million, compared to a loss of $2.8 million in Q4 2024. This improvement was driven by strong revenue growth and disciplined cost management.
Adjusted EBITDA Adjusted EBITDA for Q4 2025 was $64 million, contributing to a full-year adjusted EBITDA of $230 million, up from $11 million in 2024. This reflects a 22% adjusted EBITDA margin for the year, compared to 2% in 2024, due to operating leverage and revenue growth.
Loan Originations Total loan originations in Q4 2025 were $456,000, up 86% year-on-year and 6% sequentially. Personal loan originations grew 75% year-on-year, while auto and home loan originations grew 5x year-on-year. This growth was supported by improved AI models and expanded funding partnerships.
Contribution Margin Contribution margin for Q4 2025 was 53%, down 4 percentage points from the prior quarter. The decline was intentional, reflecting a focus on long-term customer value and expansion into lower-margin but larger market segments like secured products and prime borrowers.
Loans on Balance Sheet Loans held on the balance sheet were reduced by 20% quarter-over-quarter to $985 million by the end of Q4 2025. This reduction was part of a strategy to transition funding for new products to third-party capital.
Credit Performance The average return of the last 12 quarterly vintages of loans exceeded U.S. Treasuries by 608 basis points, with every vintage exceeding Treasuries by at least 270 basis points. This was achieved despite a challenging macroeconomic environment, showcasing the effectiveness of AI-driven lending.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Personal Loan Product: Upstart grew originations by 75% year-on-year, contributing significantly to profitability.
Auto and Home Loans: Originations for both grew 5x year-on-year, with acceleration in Q4. Auto originations increased 340% year-on-year, and home originations increased 350% year-on-year.
Small Dollar Credit Products: Launched into funding markets, contributing to Upstart's expansion.
Market Share in Personal Loans: Upstart achieved significant market share gains in personal loans, driving growth.
Expansion in Auto and Home Loans: 70% of funding for auto and home loans in Q4 came from 11 partners, with 13 more signed up for the coming year.
AI Model Updates: Launched Model 24 and Model 25, improving accuracy and expanding consumer reach.
Operational Efficiency: Revenue grew 64% while headcount grew only 18%, showcasing strong operational leverage.
Loan Balance Sheet Reduction: Reduced loans on balance sheet by 20% in Q4.
Leadership Transition: Paul Gu will become CEO, while Dave Girouard transitions to Executive Chairman.
AI-Powered Lending Expansion: Focused on gaining market share in unsecured home and auto segments and additional lending categories.
New Financial Guidance Approach: Introduced monthly transaction volume updates and annual guidance to improve transparency.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Leadership Transition: The transition of leadership from Dave Girouard to Paul Gu as CEO, while planned, could pose challenges in maintaining strategic continuity and operational stability during the transition period.
Contribution Margins: Decline in contribution margins due to growth in secured products and prime borrowers, which have lower take rates, could impact profitability in the short term.
Balance Sheet Exposure: Efforts to reduce balance sheet exposure while scaling new products could create financial strain or operational challenges.
Macroeconomic Environment: The company assumes a constant default risk environment and static interest rates, but any adverse changes in these factors could negatively impact credit performance and financial results.
Funding Sources: Dependence on third-party funding for new products like auto and home loans could pose risks if these funding sources become constrained or unavailable.
Technology and AI Advancements: While technology advancements are a strength, the reliance on AI and data models requires continuous improvement and could face challenges if data quality or model performance deteriorates.
Product Diversification: Rapid scaling of new products like auto and home loans may strain resources and operational capacity, potentially impacting service quality or financial performance.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Growth: Upstart projects a compound annual growth rate (CAGR) of 35% for the next three years (2025-2028), with total revenues expected to reach approximately $1.4 billion in 2026.
Profitability: The company anticipates an adjusted EBITDA margin of approximately 21% in 2026, with a terminal adjusted EBITDA margin of around 25% by 2028.
Product Expansion: Upstart plans to scale its secured product categories in auto and home lending, expecting these to contribute over $100 million in fee revenue in 2026. The company also aims to maintain rapid growth in its core personal loan business.
Market Share and AI Lending: The company expects AI-powered lending to gain significant market share in unsecured, home, and auto segments, with additional lending categories to be introduced in the near future.
Capital Supply and Funding: Upstart aims to streamline its balance sheet and build new committed multiproduct relationships with lenders and investors, reducing reliance on its balance sheet for funding.
Technology and Data Advancements: The company plans to continue leveraging proprietary training data and AI advancements to improve credit performance and expand its market presence.
Guidance Updates: Upstart will provide monthly transaction volume updates and focus on annual guidance to offer better insights into near-term dynamics and long-term potential.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How did the company manage to reduce balance sheet loans despite strong growth in autos and HELOCs in Q4?
A:The company incubated newer products, ensured the models were correct, and lined up third-party partners. 70% of these products were funded by third parties, leading to reduced balance sheet loans despite growth in autos and HELOCs. The trend is expected to continue.
Q:How much conservatism is built into the UMI guidance?
A:The guidance assumes a constant UMI, which is the company's best estimate of background consumer risk. It is not necessarily conservative or aggressive.
Q:Why are EBITDA margins expected to be down in 2026?
A:The decline is due to a changing mix as the company expands into larger consumer credit markets with lower take rates but larger TAMs. Additionally, the company is taking a longer-term view of customer value, focusing on brand and reputation building, which impacts short-term margins.
Q:What is the health of the private credit and capital partnerships?
A:The company is deliberate about its private credit partners, who perform deep diligence. The credit is performing well, and the partnerships are in good shape.
Q:What is the general environment for the consumer, and how is it reflected in the company's models?
A:The consumer environment is stable, with UMI values returning to post-COVID normalization. Temporary increases in consumer risk detected in Q3 have since faded, and the broader trend is stable.
Q:What is the long-term market share opportunity in auto and home lending?
A:The company sees significant growth potential, with AI-enabled lending expected to dominate these categories in the next decade. The company aims to be a leader in this space.
Q:What is the company's perspective on the personal loan market?
A:The company focuses on winning market share rather than overall market growth. It believes its product is highly competitive and aims to continue investing in technology to widen its lead.
Q:How does the company view the impact of economic policies like tax refunds on personal loan demand?
A:While looser economic policies may reduce credit demand, they improve consumer financial health, making it easier to approve loans at competitive rates, which benefits the company.
Q:What is the company's approach to balancing take rates and lifetime value?
A:The company is focusing on long-term customer value, even if it means lower take rates. This approach aims to build a larger, more valuable business by offering competitive rates and winning market share.
Q:What is the profile of partners for secured products?
A:The company works with a mix of depository institutions, credit unions, banks, and specialized institutional partners, building a broad and resilient supply chain.
Q:What are the company's expectations for tax rates in 2026?
A:The company expects its operating loss carryforwards to remain in force for 2026.
Q:What is the status of the bank and credit union channels for loan purchases?
A:Existing partners are steady buyers with increasing appetite. Larger institutions are showing interest in secured categories, expanding the company's relationships.
Q:What are the characteristics of the company's loan mix and duration?
A:The core business has steady durations with a mix of 3- and 5-year terms. Secured products have slightly longer durations but are not yet a significant factor in the overall mix.
Q:How does the company engage with borrowers during the repayment period?
A:The company is early in building engagement programs but sees significant upside in cross-selling and improving mobile capabilities.
Q:What is the company's guidance on new products and their impact on revenue?
A:The guidance is based on existing products, including new growing categories like auto and HELOC. The company has exciting ideas but does not include unlaunched products in its financial guidance.
Q:How does the company view advancements in AI and their impact on competition?
A:The company sees advancements in AI as beneficial, providing better infrastructure and algorithms. It believes its proprietary models and data give it a competitive edge.
Q:What is the company's approach to operating leverage and margin expansion?
A:The company expects fixed costs to grow slower than revenue and contribution profits, leveraging AI to improve productivity and achieve higher margins over time.
Q:What is the company's outlook for revenue growth and product mix by 2028?
A:The company expects new products like auto and HELOC to grow faster than personal loans, eventually becoming larger revenue contributors due to their larger addressable markets.
Q:How does the company view its balance sheet exposure in the long term?
A:The company uses its balance sheet to incubate new products and does not aim to be a predominant balance sheet lender. Fee-based revenues are expected to dominate.
Q:What is the company's strategy for AI adoption in lending?
A:The company focuses on proprietary AI models tailored for lending, leveraging advancements in AI for automation and operational efficiency. It sees AI as a significant competitive advantage.
Q:Review of Unclear Management Responses
A:Management avoided providing specific metrics or detailed breakdowns for certain areas, such as the exact mix of revenue growth from new products by 2028, specific tax rate expectations beyond 2026, and detailed lifetime value metrics for repeat borrowers. Additionally, while they discussed the benefits of AI, they did not provide concrete examples of how it has directly improved specific business outcomes.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI lending
CEO role
CFO
CTO
Executive Chairman
LLM
President
Upstart today
auto home
background
basis point
brand
category
credit Upstart
decade
era upstart
history
home auto
home origination
leader
loan origination
market share
origination dollar
origination product
position
potential
press
product market
profit
rate year
release
repayment event
scale
testament
training
treasury basis
update
ups down
year capital
year day
UPST Transcript
Upstart Holdings, Inc. (UPST) Q4 2025 Earnings Call Transcript
Positive2-10
The earnings call reveals strong financial metrics, optimistic guidance, and strategic focus on AI and new product development. Despite some unclear management responses, the company's partnerships and market share growth are promising. The stable consumer environment, deliberate credit partnerships, and focus on long-term customer value are positive indicators. Given the market cap, these factors suggest a positive stock price movement.
Upstart Holdings, Inc. (UPST) Q3 2025 Earnings Call Transcript
Positive11-5
The earnings call summary and Q&A indicate strong financial metrics and optimistic guidance. The company is focusing on AI enhancements and new product growth, which are expected to drive market share leadership. Despite some model conservatism impacting conversion rates, credit performance remains strong. The positive sentiment is bolstered by a robust shareholder return plan and strategic partnerships, suggesting a likely positive stock price movement over the next two weeks.
Upstart Holdings, Inc. (UPST) Presents At Goldman Sachs Communicopia + Technology Conference 2025 Transcript
Neutral9-8
Upstart Holdings, Inc. (UPST) Q2 2025 Earnings Call Transcript
Positive8-5
The earnings call highlights several positive factors: strong financial metrics, strategic partnerships, and optimistic guidance for future profitability. The company is focusing on AI leadership and funding supply preparation, which are expected to drive growth. Despite a negative net income guidance for Q2, the optimistic full-year guidance for 2025 suggests a positive long-term outlook. The Q&A session revealed management's strategic approach to competition and funding, which should reassure investors. Given the company's market cap and strategic initiatives, a positive stock price movement of 2% to 8% over the next two weeks is anticipated.
UPST Slides
Upstart Q4 2025 slides: Revenue hits $296M despite EPS miss, automation reaches 91%2026-02-10
Upstart Q3 2025 slides: Revenue soars 71% YOY, automation reaches 91%2025-11-04
Upstart Q2 2025 slides: first GAAP profitable quarter with 102% revenue growth2025-08-05
Upstart Q1 2025 slides: 89% origination growth, but stock tumbles on margin concerns2025-05-06
UPST Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
